CDH halts investment on China VC fund

The firm will focus on developing existing portfolio companies as it looks to bring in new team members, according to a source familiar with the situation. There has also been a reluctance to make investments in recent months due to concerns about increasing frothiness in the technology space.

CDH Venture Partners III reached a final close of $116 million earlier this year. The fund launched in mid-2012, seeking $300 million, but marketing was suspended for a year and the re-launched vehicle was smaller in size and remit. The revised target was $150 million.

Prior to the final close, Steven Wang, a partner at CDH Venture, left the firm. He subsequently set up HighLight Capital, a healthcare-focused GP, alongside Jason Zhao and John Zhu, previously healthcare specialists at SoftBank China Venture Capital and Greenwoods, respectively.

Wang's departure was followed by that of Vivian Chen, also a partner and a member of the technology, media and telecom team, and Gerard Li, a more junior investment professional.

Fund III has approximately $100 million in dry powder and, for the time being, this will be put towards follow-on investments in portfolio companies.

The Fund II portfolio includes online real estate platform FangDD, which CDH has backed across two rounds, the latter a commitment of $80 million in July made alongside to other investors. CDH has also featured in all three rounds of funding for vacation rental website Tujia, which has raised $164 million since inception, most recently a $100 million round in June.

The fund has also supported technology-enabled logistics provider Best Logistics and online food-ordering platform Daojia, which completed a $50 million Series D round in September.

Strong-performing investments in Fund III include Benlai, an e-commerce platform that specializes in fresh produce, and Hangzhou Wacai Science, a developer of personal finance management apps. CDH featured in the Series A round in 2013 and the $50 million Series B, which was announced earlier this month.

CDH's first venture capital fund closed at $210 million in July 2006 and Fund II closed at $505 million in November 2008. The firm operates across private equity, venture capital, real assets, mezzanine and credit financing, public equities and wealth management. It reached a final close of $2.55 billion on its fifth US dollar-denominated China private equity fund in February of this year.

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