TCDRS backs trio of Hillhouse funds

The private equity firm raised $10.6 billion for its fourth fund in 2018, which remains the largest final close by an Asia-based vehicle, pending KKR’s completion of its latest offering. For the latest vintage, Hillhouse is raising separate buyout, growth, and venture vehicles. It is seeking $9.5 billion and $2.5 billion, respectively, for the buyout and growth funds.

TCDRS said it would invest $100 million in Hillhouse Fund V, $85 million in Hillhouse Focused Growth Fund, and $15 million in Hillhouse Venture Fund. The pension plan committed $85 million to Hillhouse Fund IV. LPs are not obliged to back every vehicle in the Fund V series. San Francisco Employees’ Retirement System and GIC Private, for example, invested in buyout and growth only.

The flagship Hillhouse funds make healthcare, consumer, technology, and services investments globally, but with a focus on Asia. The firm operates across private and public markets, backing everything from relatively early-stage start-ups to mature businesses.

AVCJ Research has records of more than 50 Asia-based transactions in the past 12 months, of which two-thirds were growth capital. There were also a handful of PIPE deals and one buyout. At least 10 Hillhouse portfolio companies have gone public in the past 12 months, of which more than half are healthcare businesses.

Earlier this year, Hillhouse launched a venture capital arm under the name GL Ventures. The first fund will reportedly be RMB10 billion ($1.4 billion) in size. GL Ventures operates independently of its parent, with a team drawn from Hillhouse's original VC investment operation.

TCDRS had $34.3 billion in assets as of December 2019, of which $5.6 billion – or 16.5% - was invested in private equity across 244 funds. The pension system had $3.1 billion in buyouts, $2 billion in venture capital, and $426 million in real assets. There was also an unfunded commitment of $4.2 billion. Last year, TCDRS increased its target allocation for the asset class from 18% to 20%.

The private equity program returned 17.3% for the 12 months ended December 2019, trailing all public equity categories and real estate investment trusts. However, PE is the best-performing asset class on a three-year and a five-year basis, and it comes second to private real estate on a 10-year basis.

Other commitments by TCDRS to Asia-based GPs in the last five years include Joy Capital, Sky9 Capital, Baring Private Equity Asia, Lightspeed China Partners, IDG Capital, and RRJ Capital.

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• Topics
• Greater China
• Fundraising
• LPs
• Growth
• Buyout
• Venture
• North America
• Asia
• Hillhouse Capital Management
• Texas County & District Retirement System (TCDRS)