Orchid hits $920m hard cap on sixth China fund
Orchid Asia has closed its sixth China growth capital fund, hitting the hard cap of $920 million after receiving more than $1.3 billion of interest from prospective LPs.
The vehicle launched in March of this year with a target size of $750 million. The GP received strong support from existing LPs, with public and private pension funds, insurance companies and endowments accounting for the vast majority of commitments.
In June, Pennsylvania Public School Employees' Retirement System (PSERS) revealed it had agreed to invest up to $75 million in the fund. It put $40 million into Orchid's previous vehicle, which closed at $650 million in 2011. As of December 2013, Fund V had delivered a net multiple of 1.7x and a net IRR of 55.1%.
The fund features two cornerstone investments in companies that went public in Hong Kong last year - watch maker Time Watch and food and beverage producer Tenwow International. Other recent deals include online games developers Linekong and FunPlus Game and cosmetics retailer Beauty Plus.
Orchid was founded in 1993 and raised $42 million for its first fund the same year, according to AVCJ Research. That fund is now fully liquidated, as is its 1997 vintage successor. Of the remaining funds, two are harvesting and two actively investing. The private equity firm has aggregate assets under management of $3 billion and operates out of offices in Hong Kong, Shenzhen, Shanghai, Beijing and Guangzhou.
It has invested in around 70 companies since inception and made over 38 full and partial exits.
Orchid focuses on backing experienced operating executives in building franchises in Asia, with an emphasis on China. A typical target would be an expanding domestic enterprise in an industry with high barriers to entry and good growth prospects. Sectors of interest include consumer products and services as well as outsourced manufacturing and services.
A PSERS presentation said the fund will write equity checks of $5-50 million, rising to as much as $100 million in select cases. The bulk of the corpus will be invested in China plus Taiwan and Hong Kong, with up to 25% available for other geographies.
Kirkland & Ellis served as fund counsel to Orchid Asia VI.
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