China's Oceanpine to go heavy on green-tech in Fund III

“The new fund will be more weighted towards green-tech versus its predecessor, given China’s competitive advantages in related value chains, Oceanpine’s strength in the sector, and the sector’s allure for international LPs,” Shirley Hu, a managing director at the firm, told Mergermarket, AVCJ’s sister publication.

Oceanpine is not alone in identifying China’s potential in this area. Capital earmarked green-tech has increased considerably with many managers keen to leverage perceived policy support for the space. Lightspeed China Partners went so far as to change its Chinese name to Lightspeed Photosynthesis, reflecting a renewed emphasis on green-tech.

Oceanpine will begin marketing for Fund III no earlier than September, Hu added. Oceanpine was last in the market in 2021 when it raised CNY 2bn (USD 280.8m) for its debut renminbi fund. That vehicle is now 60% deployed.

The firm closed its second US dollar fund on USD 400m in late 2020 and 20 investments have been made to date. Advanced technology was the primary area of focus; Oceanpine’s track record in green-tech is largely in the renminbi fund space, Hu explained.

Most of the LPs in Fund II were Asia-based family offices and entrepreneurs, Hu said. For Fund III, the firm is keen to attract commitments from fund-of-funds, sovereign wealth funds, and insurance companies from the Middle East, Southeast Asia, North Asia, and Europe.

Ticket sizes for early-stage investments are USD 5m-USD 10m, rising to USD 10m-USD 20m for follow-ons, and USD 20m-USD 40m for later-stage deals. Fund III – which has a 10-year lifespan including two one-year extensions – will be split 60-40 between late-stage and early-stage opportunities.

Hu noted that Oceanpine takes a barbell approach to growth investment: it backs market leaders in pre-IPO rounds and then identifies earlier-stage companies operating in the same value chains and participates in Series A and B rounds.

The firm was established in 2016 by Dave Chenn, who previously founded China Century Group, a Beijing-headquartered multinational. Fund I had a corpus of USD 400m, all of it from internal sources. Fund II had a 30% GP commitment – relatively high by private equity industry standards.

“With a 30% commitment, our interest as the GP is closely aligned with that of the LPs. This is attractive for investors in US dollar-denominated funds,” Chen told AVCJ in 2021. “We have promised to put 30% into all successor vehicles.”

Chenn claimed that Oceanpine regularly taps into his network. For example, two portfolio companies in the autonomous driving technology space, Horizon Robotics and Black Sesame Technologies, were introduced to several top automotive manufacturers through Yuantel Technology, an intelligent car services platform Chenn founded.

Horizon and Black Sesame are two of more than 70 companies Oceanpine has backed across advanced technology and healthcare. It has deployed more than USD 3bn to date.

Other portfolio companies include lithium-ion battery maker HiNa Battery, skincare products player Giant Biogene, enterprise software provider XforcePlus, artificial intelligence-enabled healthcare technology company XtalPi, and AI computing power specialist Enflame Technology.

As of December 2022, the second US dollar fund had generated an IRR of 35x and a 1.8x multiple, Hu said. The Fund I IRR and multiple were 23.5% and 2x, respectively, while distributions to paid-in amounted to 1.5x.

Oceanpine Capital has a team of over 40 across offices in Beijing, Shanghai, Hong Kong, and Silicon Valley.

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• Topics
• Greater China
• Fundraising
• Growth
• Technology
• Cleantech
• China
• Oceanpine Capital
• green-tech
• Fundraising