Primavera raises $3.4b for third China fund
Primavera Capital Group has closed its third China fund at $3.4 billion, having extended the fundraising period by six months.
The final close – against a target of $2.8 billion – was confirmed by a source familiar with the situation. It follows a first close of $1.5 billion in May 2018. Primavera declined to comment on fundraising.
The private equity firm was founded in 2010 by Fred Hu, formerly Greater China chairman at Goldman Sachs. It raised $1 billion for its debut US dollar-denominated fund in 2011 and then closed Fund II at $1.93 billion in 2016. Primavera also manages renminbi vehicles.
The GP is arguably best known for backing the spin-out of Yum China – operator of KFC, Pizza Hut, and Taco Bell – into a separate US-listed entity in 2017 and its alignment with Alibaba Group. The latter relationship not only delivered a pre-IPO stake in Alibaba but also participation in rounds for its affiliates in food delivery (Koubei), logistics (Cainiao) and financial services (Ant Financial).
Primavera has backed a string of new economy businesses. They include news aggregation and video sharing platform operator ByteDance Technology, online second-hand car trading platform Souche, online lending and wealth management business Lufax, apartment rental start-up Danke, and electric car manufacturer Xpeng.
The latter recently filed for a US IPO. Last year, Primavera secured a liquidity event via the US capital markets when Sunlands Online Education raised $149.5 million on the New York Stock Exchange. Education is a prominent theme in the private equity firm’s portfolio, with online mathematics tuition platform Yangcong 345 and K-12 player Zuoyebang featuring in the portfolio.
Primavera makes selective buyout as well as growth capital investments. Two of these have come in the education space, namely study-abroad program provider WorldStrides – a joint deal with Eurazeo – and Stratford Schools. Both companies are US-based but have China expansion angles.
The fundraise continues a rich vein of activity from China-focused managers. Earlier this year, Boyu Capital closed its latest US dollar-denominated fund at $3.6 billion, while CITIC Capital collected $2.8 billion and DCP Capital and Centurium Capital each raised $2 billion.
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