China's BA Capital raises $349m for latest renminbi fund
Black Ant Capital, also known as BA Capital, has closed its third renminbi-denominated fund on CNY 2.5bn (USD 349m), with commitments from independent fund-of-funds, government guidance funds, insurers, and corporates.
The fundraising process began in the middle of 2021 and a first close came in September of that year. LPs that have disclosed their participation include Hong Kong-based conglomerate Chow Tai Fook Group, and portfolio companies like fashion toy brand Pop Mart, bar chain brand Helens, and Nanji E-commerce.
Part of BA Capital's strategy is to build an ecosystem of entrepreneurs-turned-LPs who can pool their knowledge to help source investments and develop companies.
David He established the firm in early 2016 after leaving his previous job as head of strategic investment at ByteDance. A debut renminbi fund closed on CNY 380m (USD 53m) in 2017 and a successor vehicle closed on CNY 1bn in 2020.
The firm launched its debut US dollar fund in the same year and reached a first close of USD 100m against a target of USD 150m. A source close to the situation told AVCJ that the process has been put on hold until next year given the recent volatility in China and the challenges this has presented for fundraising.
One of BA Capital's founding partners, Feng Chen, departed to launch Dayone Capital. He closed a debut US dollar fund on USD 630m last year.
BA Capital focuses on the consumer sector and specialises in emerging brands. It disputes any notion that retail has a lower barrier to entry than tech-heavy business models.
“The simpler the business, the harder it is to form a big company, right? For example, before Hey Tea, the milk tea industry was highly fragmented. China is a complicated market, so it is difficult for investors to judge potential market size and trends,” He told AVCJ in a previous interview.
Portfolio companies must have large potential addressable markets and then BA Capital only backs one player in each segment. It then looks to participate across multiple funding rounds.
Standing out portfolios also include online-to-offline fashion retailer KK Group, yoghurt brand Simple Love, barbeque restaurant chain Henjiuyiqian, and fashion social e-commerce platform Harmay.
BA Capital claims distributions to paid-in (DPI) on its first two renminbi funds are 1x and 0.5x, respectively.
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