CITIC Capital closes fourth China buyout fund at $2.8b

LP support came from a mix of existing and new investors, including pension funds, sovereign wealth funds, insurance companies, financial institutions, family offices and fund-of-funds. An initial target was set at $2 billion last year and a first close of $1.3 billion was achieved in September, including a $260 million commitment from Canada Pension Plan Investment Board. 

CITIC Capital China Partners IV will target across a range of technology, business service, industrial and consumer-related sectors, including healthcare. Corporate carve-outs are expected to be a significant theme due in part to demand for localization support among multinational corporations struggling with their China businesses. Deals to date include the 100% carve-out of Hangzhou UCO Cosmetics from Qingdao KingKing Applied Chemistry from about $200 million.

CITIC Capital closed its previous US dollar-denominated China fund in 2017 at $1.6 billion. This was the first fund for which the GP combined its China and international teams, which had previously managed separate funds. Prior China funds also include a $925 million buyout vehicle closed in 2010 and an international fund that raised $560 million in 2011 for US assets with underexploited China angles. Fund IV brings the firm's total assets under management to more than $26 billion.

Private equity investors are expected to benefit from growing potential for buyouts in China as a result of the local economic slowdown, although the opportunity may be mitigated by issues related to US trade tensions such as supply chain disruptions and technology ecosystem decoupling. There were 18 buyouts of China-based businesses in 2018 worth a combined $3.3 billion, down from $13.7 billion across 27 deals the previous year.

Yichen Zhang, chairman and CEO of CITIC Capital, said his firm's latest fund would navigate this environment through access to a deep China network and strong value-add capabilities. CITIC Capital's recent buyout activity in the country includes a database division of Euromoney Institutional Investor, Ajinomoto's Amoy Food, and China Merchants Loscam. "Despite the current global and domestic headwinds, we continue to believe in China's long-term growth potential," Zhang said in a statement.

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• Topics
• Greater China
• Fundraising
• Buyout
• China
• CITIC Capital