Huaxing Growth hits $800m second close on China fund
Huaxing Growth Capital, the private equity division of China Renaissance, has achieved a USD 800m second close on its fourth flagship US dollar-denominated fund.
The fund launched in June 2021 with a target of USD 1.2bn and a first close of USD 550m came in October. AVCJ was informed of the second close by a source close to the situation.
LPs include two sovereign wealth funds, financial institutions from Asia and Europe, family offices representing entrepreneurs from Asia and the US, and high net worth individuals.
Fan Bao, chairman and CEO of China Renaissance, previously told AVCJ that Fund IV will be deployed across no more than 30 companies, with equity checks in the USD 50-100m range.
More than USD 200m had already been invested across seven companies by the end of January, the source added. The fund is taking a more active approach than its predecessors by leading investments and taking board seats in many cases.
Fund III closed on USD 600m in 2020, up from USD 183m in the previous vintage. There are three renminbi-denominated funds under Huaxing Growth Capital, while three more funds have been raised under a separate healthcare-focused private equity strategy.
China Renaissance had RMB61.7 billion ($9.5 billion) in assets under management (AUM) at the end of June 2021. Across all its funds, the average IRR and gross multiple were 54% and 4.3x.
Advanced industrials, hard technology, and healthcare are expected to be prominent themes in Fund IV, alongside consumer and enterprise solutions. China Renaissance looks to invest in line with key policy initiatives: high-quality, sustainable, and increasingly technology-driven economic growth; and enlarging the 400 million-strong middle class through access to new brands and services.
The firm is especially interested in "smartisation” - a term for using technological innovations in the traditional economy - and the mobility value chain. The latter involves not only electric vehicle (EVs) and autonomous driving specialists, but also the long tail of the components suppliers that serve them, from semiconductors to batteries.
China Renaissance expects the macroeconomic environment to continue to improve through 2022 as new regulatory policies on overseas listings and platform internet businesses provide greater stability and visibility. This is expected to boost market confidence and economic activity.
Founded in 2005, China Renaissance made its name as an early advisor to China's technology unicorns. It then expanded into private equity and launched Huaxing Growth Capital in 2013.
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