Hillhouse completes $10.6b fundraise

The vehicle, which is said to have been heavily oversubscribed, represents the largest fundraise in the region, surpassing the $9.3 billion KKR received for its third pan-Asian fund. Disclosed LP commitments to Hillhouse Fund IV have come from the likes of Canada Pension Plan Investment Board, San Francisco Employees' Retirement System, and Texas County & District Retirement System.

Hillhouse, which was founded by Lei Zhang in 2005 and received seed funding from the Yale University endowment, has a reputation for flexibility in its investments. The firm previously described itself as a long-term, stage-agnostic fundamental equities investor willing to back companies ranging from start-ups to established listed players.

However, more recently Hillhouse has also shown an appetite for sizeable buyout transactions that require operating capabilities as well as an understanding of technology. The firm teamed up with CDH Investments last year on a $6.8 billion privatization of Belle International, a Chinese women's shoe retailer that needed to integrate its traditional retail business model with the digital economy.

Hillhouse seconded one of its founding partners to the company as head of a division of more than 1,000 engineers and executives dedicated to this effort. Initiatives include cloud-based inventory management, which facilitates faster home delivery, and the use of big data and artificial intelligence (AI) to harmonize online-offline merchandising and pricing.

Last year, the GP also participated in the $11.5 billion privatization of Singapore-listed warehouse operator Global Logistic Properties, while last month it was linked to an unsuccessful $17.6 billion bid for Yum China Holdings, operator of the KFC, Pizza Hut and Taco Bell brands in China.

"We are deeply grateful for the ongoing trust of our partners. We look forward to working with innovation-minded, world-class businesses and management teams seeking to deploy technology-driven solutions to create value for all stakeholders," Zhang said in a statement.

Hillhouse Fund IV continues the trend of large-scale capital raising for private equity in Asia. Baring Private Equity Asia reached a first close of $4.5 billion on its seventh pan-regional fund in July, having set a target of $5.5 billion, while PAG Asia Capital is seeking upwards of $4.5 billion for its latest vehicle.

Earlier in the year, Affinity Equity Partners closed its fifth fund at $6 billion, up from $3.8 billion for the previous vintage, while The Carlyle Group's fifth Asia buyout vehicle came in at $6.55 billion, a sizeable increase on the $3.9 billion raised for Fund IV. KKR's fund was 55% larger than its predecessor.

According to AVCJ Research, Hillhouse Fund III closed in early 2016 at $4.2 billion, more than double the amount raised for Fund II two years earlier.

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• Topics
• Greater China
• Fundraising
• Growth
• Buyout
• China
• Hillhouse Capital Management