Hopu reaches its end
Following earlier reports last month (soon denied) that Hopu Investment Management was to break up without seeking to raise a second fund, the $2.5 billion China-linked private equity and multi-strategy investment firm now indeed appears to be heading for dissolution.
Hopu’s offices in Singapore confirm that founder Fang Fenglei will no longer be reachable there, though insist that he will remain with the firm. Further clarification unforthcoming, LPs and GPs all maintained that Fang and fellow founder Richard Ong will no longer be working together, and may raise separate vehicles.
“Hopu in its current incarnation was a one-off,” said one. “The various powers that came together to form Hopu are going to go off and do their own thing.”
Hopu was indeed nearing a decision point on its future, with the firm closing on the 66-75% threshold for capital invested. However, the firm’s final split simply fulfilled widespread expectations that Fang and Ong would not be continuing together. Although some reports and opinion centered on a purported difference in investment style between the two lead principals, those closer to the firm and its founders saw far less disparity between the two, and put much of the final outcome down to personalities.
Former Goldman Sachs Gaohua partner Fang Fenglei and fellow Goldman alum Ong formed Hopu in 2007, raising some $2.5 billion for its USD Master Fund I through Fang’s reputation as a China rainmaker, with anchor investors including Goldman and Singapore’s Temasek Holdings (where Ong’s brother is a senior executive), as well as Japan’s Norinchukin Bank and Daiwa Securities Group. Hopu’s investment style tended to polarize opinion, with some claiming the platform was not really private equity; the group certainly brought off many minority PIPE commitments to major Chinese banking institutions. Yet LP disquiet does not appear to have driven the final split, and there are no signs that Hopu went beyond its mandate.
Rather, Hopu’s makeup and fate raises questions about the development of private equity in China, and which types of firms are best suited for the market. “This was another symptom of a China PE bubble,” said one GP. “Teams will split. There will be so many more high-profile faces coming up.” But Hopu’s movement into advisory roles, supporting Bridas Energy Holdings of Argentina in March in a $3.1 billion JV with China’s China National Offshore Oil Corp. (CNOOC), may set a precedent for the industry. In this, as well as his multi-disciplined investment style, Fang may prove to have been a pioneer.
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