China's Centurium names Michael Chen as partner

It brings Centurium’s number of partners to four and expands deal expertise at the firm following the close earlier this month of a debut fund at $2 billion. Chen will work closely with David Li, Centurium’s chairman and CEO, who has led deal activity to date. The firm has about 20 investment professionals in total.

Chen participated in 16 investments in China as a managing director for Warburg Pincus between 2011 and last May. These include six deals in the transportation sector, four in logistics, three in education, and three in retail. Twelve deals were B2C and four were B2B. Two were buyouts, including one in retail and one in education. Retail is expected to represent significant buyout opportunity for Centurium in the immediate future. 

“We see macro growth slowing down and some multinationals and first-generation entrepreneurs trying to sell their businesses at reasonable valuations while the overall private equity and secondary markets are getting more mature,” Chen told AVCJ. “All this will lead to more opportunities to buy controlling stakes in China, but we don’t want to do that just through financial engineering. We need to tweak the businesses to drive growth and find angles to upgrade into the new economy, especially since we’re facing a relatively softer macro than before.”

Centurium’s core investment thesis aims to leverage the slower but still substantial growth in China by identifying entries related to consumption upgrade, industry consolidation, and technology-driven transformations of legacy industries. The firm seeks a mix of control and significant minority deals in consumer, services, and healthcare sectors. The new fund, which closed after 15 months in the market, has made five investments to date and is 40% deployed. The highest-profile deal to date is China’s second-largest coffee shop chain Luckin Coffee, which went public earlier this year.

Li, who previously helped Warburg Pincus establish its China franchise, spun out to launch Centurium in 2016. Li and Chen will work alongside Joseph Chow, who previously served as China president of Moelis & Company and CFO at China Netcom, as well as Lei Lin, the founder of an automotive research business called Sinotrust Market Research that was acquired by Experian Group and WPP.

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