CDH to close China fund at $2.55b

The fund, which launched in September 2012, had an initial target of $2 billion with a hard cap of $2.5 billion. A first close of $1 billion came on February 8, 2013 and CDH had one year from that date to complete the fundraising process. It has not applied to LPs for an extension.

The vehicle is more than $1 billion larger than its predecessor, which closed at $1.46 billion in April 2010. It will also surpass the $2.36 billion Hony Capital raised for its fifth US dollar fund. That vehicle closed in January 2012 after about four months in the market, having originally targeted around $2 billion.

"We feel that CDH will be able to deploy what is admittedly quite a large China fund in a reasonable way," a member of the LP community told AVCJ. "They have never really overreached and their portfolios are in pretty good shape."

According to a source familiar with the fundraise, the LP base is one third North American, one third European and Middle Eastern, and one third Asian. There will be around 60 investors in total, with pension funds, insurance companies and sovereign wealth funds featuring more prominently than in previous funds. In many cases these groups are making their first direct commitment to a China-specific GP.

The source added that a lot of the new money comes from Asia - emerging markets investors generally seen as more comfortable with the risks tied to minority investments that still dominate the China deal landscape.

As an early mover in Chinese private equity - it spun out from China International Capital Corporation in 2002 - CDH made its reputation through a number of offshore restructurings of mainland companies that were then listed in Hong Kong.

In addition to its private equity funds, the firm has launched three venture capital funds and two renminbi funds, with the most recent renminbi fund reaching a final close in 2012 of RMB8 billion ($1.3 billion), twice the size of its predecessor. The GP also covers real estate, listed equities and high-yield mezzanine.

CDH investment activity from the last 12 months includes a couple of control deals - Hong Kong-listed auto after-sales service provider New Focus Auto and apparel manufacturer Baroque Japan. In the case of Baroque, which was bought from CLSA Capital Partners, the PE firm will support expansion in China.

This cross-border theme is also apparent in CDH portfolio company Shuanghui International's acquisition of US-based pork producer Smithfield Foods, although it two domestic stories - classic growth equity and consolidation of fragmented industries - are expected to be equally prevalent in Fund V.

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• Topics
• Fundraising
• Greater China
• GPs
• Fundraising
• GPs
• LPs
• China
• CDH Investments Management