Hony Capital raises $4b for new USD, RMB funds

Hony announced Thursday that it had closed its fifth US dollar-denominated fund at $2.4 billion and collected a total of RMB10 billion ($1.6 billion) for its second renminbi-denominated fund. The dollar vehicle entered the market as recently as September 2011 - with an initial target of $2 billion, according to Reuters - reflecting investors' strong appetite for established China GPs.

Nevertheless, some LPs told AVCJ that they were wary about the size of the funds. "It's too big - Chinese funds are always too big nowadays," said one LP who backed the US dollar fund. "But Hony is one of very few groups that has real value add. They have a strong culture and a strong team."

The predecessor to each fund closed in 2008, raising $1.4 billion and RMB5 billion, respectively. The National Council for Social Security Fund (NSSF) committed RMB2 billion to the 2008 renminbi vehicle and has pledged RMB3 billion to the latest fund, making Hony the first PE firm to receive NSSF backing for two consecutive funds.

By the end of 2011, Hony had invested in over 60 Chinese companies. The dollar fund will follow the firm's twin-prong strategy of reforming state-owned enterprises and backing growth capital companies. Its best-known investments include China Glass and Zoomlion, a leading Chinese manufacturer of construction machinery equipment listed in Hong Kong and Shenzhen.

John Zhao (pictured), CEO of Hony, said the emergence of China has provided opportunities for local private equity insiders, despite increasing investment pressure from the Western world.

"Changes that have not been found in foreign markets over the past two or three decades are now taking place in China," he said. "Combining our knowledge and familiarity towards the local market and our value-added attitude, Chinese PE insiders may find out a new way for private equities with Chinese characteristics."

Hony has more than $6.8 billion in assets under management and boasts an LP roster that includes the likes of Goldman Sachs, Temasek Holdings, Partners Group and Sun Hung Kai.

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• Topics
• Fundraising
• Greater China
• Renminbi fund
• Hony Capital
• China
• Fundraising
• Renminbi