Orchid targets $900m for Fund VII, PSERS re-ups

The pension system invested the same amount in Orchid’s previous fund, which launched in March 2014 with a target of size of $750 million and closed five months later at the hard cap of $920 million. In addition to PSERS, disclosed investors include British Columbia Investment Management, Maryland State Retirement & Pension System, and Oregon Public Employees Retirement System

The new fund will continue its predecessor’s strategy of providing growth capital to experienced executives who are building franchises in China, according to a PSERS filing. Orchid focuses on companies in the consumer products and services sector, as well as outsourcing manufacturing, technology, media and healthcare, where there are strong growth prospects and barriers to entry.

The private equity firm’s investments in 2017 include Beijing Chunlizhengda Medical Instruments, an orthopedic medical device manufacturer, mobile app developer SweetSelfie, and agriculture e-commerce platform DFS18.com, AVCJ Research’s records show.

Fund VII is expected to make equity investments of $20-150 million in 20-25 companies with a minimum enterprise value of $50 million. There will be a 5.56% GP commitment – no less than $50 million – alongside the fund and Orchid has allowed for up to 7% in employee co-investment.

As of March, Orchid’s sixth fund had generated a gross multiple of 1.2x and a net IRR of 13.1%. The multiple and IRR for Fund V, which closed at $650 million in 2011, were 2.1x and 29%. Net distributions to paid-in for the vehicle were 1.4x.

PSERS had $55.3 billion in assets as of March, with $11.4 billion – or 21% - of that deployed in alternative investments. The filing that relates to Orchid gives more recent information on the PE portfolio. The market value of the portfolio was $7.71 billion in June, of which $5.36 billion was in private equity, $1 billion was in special situations, and $973.8 million was in venture capital.

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• Topics
• Greater China
• Fundraising
• Growth
• LPs
• Orchid Asia Group Management
• China
• Pennsylvania Public School Employees’ Retirement System (PSERS)