Warburg Pincus returns $2b from China portfolio in 2019

Pan-Asian logistics and fund management platform ESR contributed $1 billion on its own. The company secured HK$12.6 billion ($1.6 billion) in its Hong Kong IPO, rising HK$14 billion after the overallotment option was exercised. Warburg Pincus sold 466 million shares for HK$16.80 apiece. The private equity firm has not offered details of the other exits. It secured a liquidity event through Jinxin Fertility's IPO, but sold no shares in the offering.

Zhen Wei, co-president of Warburg Pincus China, said that annual average distributions have been $1.5 billion over the last five years. During the same period, the firm has deployed an average of $2 billion per year, although in 2019 it was only $1.1 billion. Since arriving in China 26 years ago, it has invested $12 billion and generated distributions of $13 billion, with a portion of this coming from 27 IPOs.

The China share of Warburg Pincus' global assets under management is now 40%, Wei added, up from 25% several years ago. This ramp-up has been aided by the launch of China companion funds that invest alongside the firm's global flagship vehicles. Fund I closed at $2.2 billion in 2016 and Fund II - which officially includes Southeast Asia - closed at $4.25 billion last June.

The latter vehicle invests alongside Warburg Pincus Global Growth, which closed at $14.8 billion in late 2018. The two pools of capital participate in deals in the two geographies on a 50-50 basis, effectively giving the firm $8.5 billion in dry powder. Warburg Pincus' global companion funds for energy and financial services also get a cut of relevant transactions.

According to Washington State Investment Board, the first China fund had generated a net multiple of 1.2x and a net IRR of 16% as of June 2019.

Current Warburg Pincus investee companies in China include Ant Financial, China Kidswant, D&J China, Hygeia, Liepin, Mofang, Nio, Yuangfudao, and ZTO Express, as well as ESR and Jinxin Fertility. The likes of B2B trading platform Yijiupi, B2B education services player Aixuexi and Zhongyuan Consumer Finance were added to the portfolio in 2019.

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• Topics
• Greater China
• Southeast Asia
• Exits
• Performance
• Warburg Pincus Asia
• China