Centurium closes China fund at $2b

It is the third fund close by a China private equity spin-out GP this year. In April, DCP Capital, a firm founded by KKR alumni David Liu and Julian Wolhardt, raised around $2.5 billion for its debut fund. Then last month, Nexus Point Capital, which is led by K.C. Kung, who previously led Greater China investments for MBK Partners, accumulated $475 million for middle-market buyouts in the country.

Centurium pursues control and significant minority deals in China's consumer, services and healthcare sectors, with a focus on technology-enabled transformation. "We target industries that are fragmented and do not invest in technologies, and by using a B2B2C model facilitate consolidating the sector and engage with consumers," Li recently told AVCJ. "The common factor is using technology to generate more efficiencies and reduce costs."

The firm's most high-profile investment is Luckin Coffee, which has become China's second-largest coffee shop chain on the back of an aggressive store expansion program and leveraging technology to deliver supply chain efficiencies and customer insights. The company went public earlier this year.

However, the transformation thesis is apparent in several other Centurium investments. For example, eyewear brand Loho is pursuing an automated supply chain model that reduces the time taken for a new design to go from conception to launch, while Happy Kids Education and Keking provide online platforms that facilitate information exchange to kindergartens and logistics businesses, respectively. There have been five investments so far, and the fund is 40% deployed.

Centurium launched the vehicle in March of last year with a target of $1 billion and had collected nearly all that by the first close three months later. The hard cap was set at $1.5 billion but then increased to $1.98 billion. The firm claims to have received commitments from the likes of public and corporate pension funds, sovereign wealth funds, family offices, fund-of-funds, and other financial institutions.

The LP base includes GIC Private and Ontario Teachers' Pension Plan (OTPP), according to sources familiar with the situation. Meanwhile, Washington State Investment Board is among those that have disclosed their participation in the fund. The GP commitment is $60 million, with the same amount set aside for Fund II.

Li spent 14 years with Warburg Pincus, building the firm's China franchise and leading numerous investments, before departing in early 2016 to form Centurium. His fellow managing directors are Joseph Chow, who was previously China president of Moelis & Company and CFO of China Netcom, and Lei Lin, who founded automotive research business Sinotrust Market Research. There are approximately 20 investment professionals in total.

The firm also manages two renminbi pools of capital, a healthcare-focused fund and a joint investment vehicle with Ucar, a chauffered car services business that Li backed while at Warburg Pincus.

"In the context of China's new norm of economic growth model and fast-evolving business landscape, Chinese companies and entrepreneurs are faced with unprecedented new challenges as well as new opportunities. With a unique combination of global best practice and local expertise and experience, Centurium Capital is well-positioned to provide bespoke solutions to these challenges and opportunities by being a long-term partner of capital and mindshare to our portfolio companies and entrepreneurs," Li said in a statement.

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• Topics
• Greater China
• Fundraising
• GPs
• Growth
• China
• Centurium Capital