Oriza raises $660m for China semiconductor fund
Oriza Puhua, a China semiconductor-focused strategy under Oriza Holdings, has raised CNY 4.2bn (USD 660m) for its third renminbi-denominated fund.
The vehicle, which was 30% oversubscribed, received commitments from 25 LPs. Re-ups accounted for 80% of the corpus.
Investors include Oriza Holdings, Industrial Bank, Suzhou Guidance Fund, Guofang Fund of Funds, Sino-Singapore Group, China Construction Bank, Shanghai Science & Technology Fund of Funds under Shanghai International Group, Guohua Life Insurance, Meituan, China Merchants Securities. Family offices and high net worth individuals also participated.
Much like its predecessors, the new fund will invest along the semiconductor industry value chain. Integrated circuit design, semiconductor materials, equipment, packaging and testing, and relevant applications are of particular interest.
"Our layout is still mainly based on domestic substitution, while taking into account innovation," said Datong Chen, a managing partner at Oriza Puhua, stressing that companies must be profitable or have a clear sightline to profitability.
Chen added that investment activity in China's semiconductor industry is growing rapidly. Oriza Puhua backed 50 companies last year, a 50% increase on 2020, while the amount of capital deployed rose by 70%. Meanwhile, 14 portfolio companies listed or won approval for listings in 2021.
Oriza Puhua RMB Fund II, raised in 2018, has achieved eight IPOs to date, with eight more pending. The fund's distributions to paid-in (DPI) is nearly 50%.
The firm's strategy has become more diversified. In Fund I, 80% of the portfolio companies were focused on design. This fell to 60% in Fund II as China's semiconductor industry entered a period of rapid expansion and a wider variety of opportunities emerged.
At the same time, Oriza Puhua has started moving ever earlier. Chen said that many pre-IPO rounds are now too highly valued, so the firm looks to deploy earlier.
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