CDH closes sixth China PE fund at $1.5b

The Chinese GP confirmed a final close came at the end of 2019 – two years after launch. It added that its private equity team now has approximately $3 billion in dry powder, including a renminbi fund and several separate accounts. The strategy is unchanged: CDH Fund VI will provide large growth and buyout financing to companies based in China or overseas businesses with a China angle.

CDH raised $2.55 billion for its fifth fund, completing the process in early 2014 after increasing the hard cap. Since then, the firm has introduced a mid-market strategy, combining its venture team – now a legacy operation – with members of the private equity team. It targets new economy opportunities that fall below the minimum check size requirement of the flagship fund.

The first venture growth capital (VGC) fund closed at $800 million in 2017. A successor vehicle is currently being raised, with a target of $1 billion. CDH declined to comment on ongoing fundraising activity. The VGC team covers healthcare, consumer and technology, media and telecom (TMT). Collaboration with their PE colleagues may lead to the main fund backing growth fund portfolio companies once they reach a certain size.

CDH's most recent private equity investment was a cross-border deal involving Wow Tech Group, a Berlin-based company that specializes in sensual health and wellness products. It is the world's leading producer of premium vibrators. It joins a health and wellness portfolio that also includes Australian equipment player Sirtex Medical and New Zealand supplements business Go Healthy.

CDH and Hony Capital used to dominate the larger end of China's GP community. Hony closed a $2.36 billion fund a couple of years before CDH raised its fifth vehicle and then secured commitments of $2.7 billion – including a $500 million separate account – for its latest US dollar fund in 2017. Now, they face competition from a host of younger spinouts.

Last year, Boyu Capital and Primavera Capital Group secured $3.6 billion and $3.4 billion, respectively, for their latest US dollar funds, while CITIC Capital – a longstanding industry participant, not a spinout – raised $2.8 billion. DCP Capital and Centurium Capital both reached final closes of around $2 billion and the latter is already back in the market with a successor vehicle.

However, the coronavirus outbreak has already curbed fundraising in China. According to AVCJ Research, country-focused managers raised $2 billion in January and February, down from $9.4 billion in November-December 2019 and $5.9 billion in the first two months of last year. CMC Capital Group's third US dollar fund represents the only significant final close announced and most of its $950 million was accumulated last year.

CDH was established in 2002 and has $20 billion in assets under management across private equity, real estate, mezzanine, public equity, and wealth management strategies. The firm has offices in Singapore, Hong Kong, and Beijing.

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• Topics
• Greater China
• Fundraising
• Buyout
• GPs
• China
• CDH Investments Management