Hillhouse founder bullish on China life sciences

Speaking at the Asian Financial Forum, which is organized by the Hong Kong government, Zhang (pictured) noted that the coronavirus pandemic has laid bare the needs of healthcare systems, from vaccines to frontline medical care to post-treatment rehabilitation services. “A lot of things need to be revamped,” he said.

Hillhouse has made a string of healthcare investments, notably committing $830 million to JD Health as part of a $900 million round in August 2020. Four months later, the online-to-offline healthcare spinout from JD.com went public in Hong Kong. It currently has a market capitalization of around $59 billion, valuing Hillhouse’s stake at $2.6 billion.

The private equity firm has also participated in funding rounds for numerous biotech companies, such as Transcenta, InvestisBio, Antengene, Genor Biopharma, and Everest Medicines, according to AVCJ Research. Antengene and Everest both went public in Hong Kong last year, while Hillhouse came in as a cornerstone investor for several other biotech IPOs in the territory.

Zhang said that Hillhouse had built an internal operations team dedicated to the sector. “We noticed there is a big gap in having the clinical research organizations and clinical research-based hospitals to help innovative companies. We are building that clinical research infrastructure to help our portfolio companies be better, to trial their products or apply their technology much faster,” he said.

In addition, Zhang highlighted opportunities in cloud-based business services technology driven by gravitation towards online communication and in helping companies in traditional industries upgrade their operations by leveraging technology.

On broader approaches to investment, he emphasized the importance of unconventional thinking, noting that the class business school curriculum encourages programmed thought processes. Zhang prefers to give his staff a broad framework for considering investments – based on people, business, environment, and organization – and not have them adhere to a rigid scoring system.

“You almost need deprogramming to stick to first principles, to say wait a minute, what are we really doing, what is the essence of the model, who are the people, what is your motivation, and how are people continuing to carry out organization success?” he said.

Hillhouse 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.

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• Topics
• Greater China
• Healthcare
• Technology
• Expansion
• China
• Hillhouse Capital Management
• Lei Zhang