Yunfeng raises more than $1b for China fund

Yunfeng raised its debut fund in 2010 with capital from around 20 well-known Chinese entrepreneurs - known as co-founders, although they are passive investors. Fund II is understood to include a number of global institutional investors, including sovereign wealth funds. A first close of $600 million came last year and demand for allocations is said to have been strong.

Alibaba has also committed $100 million to the vehicle, while online games developer Giant Interactive - whose chairman, Yuzhou Shi, is one of Yunfeng's passive co-founders - has put in $20 million.

The fund will focus primarily on Chinese companies in the technology, media and telecom (TMT), consumer products and healthcare sectors. Investments announced in recent months include two alongside Alibaba: a 54.3% stake in pharmaceutical data provider CITIC 21CN bought for $171 million and an 18.5% stake in online video platform Youku Tudou bought for $1.22 billion.

Alibaba said in its IPO prospectus that the link to Yunfeng is beneficial to its business, the LP commitment having "formalized an institutional relationship" with the PE firm. "We expect that, through its expertise, knowledge base and extensive network of contacts in private equity in China, Yunfeng Capital will assist us in developing a range of relevant strategic investment opportunities," the filing said.

Ma owns a 40% interest in several entities that are the GPs of funds sponsored by Yunfeng. He has volunteered to donate all distributions he may receive through these entities to the Alibaba Foundation, a private charity set up by Alibaba. 

Yunfeng-managed funds have also invested in Alibaba itself. In September 2011, Yunfeng and several other investors paid $1.6 billion for a 5% stake in the company, providing liquidity to Alibaba staff that held equity interests in the company. This investment likely came from Yunfeng's first fund as well as from separate accounts. Giant previously disclosed it had invested in limited partnerships managed by the PE firm that invested in Alibaba.

In 2011, Yu said the firm had raised RMB10 billion ($1.5 billion) across two funds, one US dollar and the other renminbi. It is unclear how much capital went into each fund - or, indeed, whether Yu included separate accounts in his total - but AVCJ understands the US dollar vehicle had a corpus of $307 million.

Simpson Thacher was fund formation counsel for Fund II.

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• Topics
• Fundraising
• Greater China
• Technology
• Consumer
• Healthcare
• TMT
• Consumer
• healthcare
• China
• Yunfeng Capital
• Fundraising
• Alibaba Group
• Jack Ma