China's InnoVision seeks $250m for third fund
InnoVision Capital, a Chinese private equity firm founded by Lane Zhao, who was one of the original members of KKR’s China team, is targeting USD 250m for its third fund and first US dollar-denominated vehicle.
Zhao told Mergermarket, AVCJ’s sister title, that a first close of USD 90m came at the end of 2021. The hard cap has been set at USD 300m. The firm, which was established in 2016, has about CNY 16bn (USD 2.2bn) in assets under management across multiple funds, including two renminbi funds and a vehicle co-managed with Guizhou Railway Investment Group.
Far East Horizon, a Chinese financial leasing business that Zhao backed while at KKR, is the cornerstone investor in the new fund, Zhao said. Other commitments have come – personally or through family offices – from Xpeng Motors founder Xiaopeng He, United Envirotech founder Yucheng Lin, ex-Meituan co-CEO Tao Zhang, and Focus Media CEO Jason Jiang.
The fund will make 15-20 investments, writing cheques of USD 10m to USD 50m. One-third of the corpus has been earmarked for investments that have an environment, social, and governance (ESG) lens, specifically green energy, climate impact, and sustainability, Zhao explained. The ESG-related allocations from the Funds I and II were 40-50% and 60-70%, respectively.
“The next 20 years will see huge opportunities in the green economy, driven by global demand for renewable energy which will expand the market for storage solutions,” Zhao added.
Approximately USD 67m has been deployed across five deals to date. The first four were marked at a 1.62x multiple and a 131.2% IRR as of the first quarter of 2022. One portfolio company is expected to file for an A-share IPO this year. Zhao said he hopes two more will follow suit in 2023.
China will account for 70% of the corpus, with 30% going to Southeast Asia, he added.
InnoVision’s investments include brokerage China Securities, pharma R&D and manufacturing outsourcing players WuXi AppTec and CATUG Biotechnology, drug developers Neurophth Therapeutics and iCamuno, new energy vehicle power transmission systems specialist Lvkon, chipmaker Eswin Technology Group, and Leader Environmental Technologies.
Several portfolio companies have been supported through IPO, among them online real estate platform Ke Holdings, JD Logistics, news aggregator app Qutoutiao, and last-mile logistics specialist Gogox.
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