DCP hits $2.5b first close on second China fund

The overall target is USD 3bn, according to Mergermarket, AVCJ’s sister publication. The first close comprised commitments from a combination of existing and new investors. Due diligence by prospective LPs has been hindered by lockdowns from late March, forcing DCP to push its planned final close date toward the end of the year, Mergermarket reported.

DCP did not respond to requests seeking comment.

Regulatory filings for DCP Capital Partners II were made in October 2020 and October 2021. The second filing stated that USD 2.16bn had been raised from 54 LPs. New York State Common Retirement Fund (NYSCRF), Florida State Board of Administration, and New York State Teachers’ Retirement System (NYSTRS) have all disclosed their involvement. NYSTRS signed off on a commitment in May 2020.

DCP was established by Liu and Julian Wolhardt, who previously held leadership positions with KKR in China. A debut fund closed on USD 2.5bn in 2019, comprising a US dollar-denominated tranche of just over USD 2bn plus a renminbi sidecar of USD 500m.

The key themes are domestic consumption upgrades and industry consolidation, with consumer, industrial technology, healthcare, food and agriculture, business services, financial services, and technology, media and telecom (TMT) all on the agenda. DCP pursues a combination of minority and control investments.

Fund I reached full deployment with a commitment in April 2021 to Adopt A Cow, a dairy farm operator that pursues a direct-to-consumer sales model underpinned by digital tools, Mergermarket reported. The investment of approximately USD 100m was made jointly with KKR.

Since then, DCP has backed the likes of Datong Insurance Service, one of China’s leading insurance brokerages, Hangzhou Valgen Medtech, a medical devices manufacturer specialising in heart valve procedures, and Simple Love, a yogurt brand also known as Jian’Ai.

The private equity firm has also completed a previously announced take-private of US-listed Chinese online recruitment platform 51job, working alongside Ocean Link Capital and Japan’s Recruit Holdings, a significant existing investor. The valuation was cut from USD 5.7bn to USD 3.86bn prior to the close in response to deteriorating market conditions.

A total of USD 20.1bn was committed to US dollar funds raised by China-focused managers last year, consistent with the average for the previous five years. However, more than 70% of the capital was raised in the first half of the year, prior to regulatory action by Beijing that cast uncertainty over offshore IPOs. A government crackdown on the technology sector was already in full swing.

Fundraising for 2022 to date is a paltry USD 4.5bn, according to AVCJ Research. With LP sentiment having further weakened in the wake of the lockdowns, numerous managers are seeking extensions to their fundraising periods. Nevertheless, Trustar Capital recently set a target of USD 3.5bn for its fifth China buyout fund and is looking to raise a USD 250m growth vehicle.

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• Topics
• Greater China
• Fundraising
• Buyout
• Growth
• GPs
• China
• DCP Capital Partners
• Fundraising