Hong Kong's VMS pursues institutional upgrade

The fund, which will have a target of USD 300m, is set to launch before year-end, Jianming Zou (pictured), recently appointed head of private equity at VMS, told Mergermarket, AVCJ’s sister title. He referenced small to mid-sized fund-of-funds as likely ports of call as part of a wider-reaching fundraising effort. Hong Kong-based family offices are expected to remain the key LP constituency.

Most of what VMS has done to date has been highly customised. The firm has about USD 3bn in assets under management (AUM) in private equity across a variety of investment structures, including single-asset funds, co-investment programmes, secondaries, and direct investments. Exposure mainly came through partnerships with other managers like Legend Capital, Princeville Capital, KPCB, and Panacea Venture.

VMS established a dedicated private equity team in 2012. A debut fund of USD 100m was raised in 2015 in conjunction with Legend. A second vehicle closed on USD 350m in 2020, mainly drawing on commitments from Asia-based investors, with strong support from corporates and family offices. Zou described the earlier funds as “tailor-made portfolios.”

“VMS is determined to transform the firm from a semi-family office to a more conventional manager. Going forward, everything will be managed under a single flagship fund,” he added.

Having spent nearly 15 years as a partner at New Horizon Capital, where he led deals worth around USD 450m, Zou joined VMS earlier this year. His appointment was highlighted as part of the institutionalisation process. Other initiatives include the establishment of a portfolio management team that will receive performance-based incentives.

The new fund will focus on early- and growth-stage investments in healthcare and technology, primarily targeting companies in China. The goal is to make about 15 investments, mostly in the USD 20m-USD 30m range, although Zou said that co-investment could take capacity to USD 100m.

VMS has invested in 150 companies to date, of which 50 are currently under active management.

Past investments include contract research organisation (CRO) Pharmaron Beijing, ophthalmic drug developer Zhaoke Ophthalmology, fresh produce platform Meicai, HR services provider Renrui, and autonomous driving specialist Pony.ai. Outside of China, VMS has backed the likes of Germany-based digital automotive trading platform Auto1 Group.

VMS was founded in 2006 and its overall AUM is USD 4.2bn, though this rises to USD 10.2bn if assets held by affiliated managers are included, according to the firm’s website. In addition to the private equity portfolio, VMS has businesses covering structured financing and real estate with AUM of approximately USD 1bn.

There are 80 staff across the entire firm, of which 18 are on the private equity investment team

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• Topics
• Greater China
• Fundraising
• GPs
• LPs
• Growth
• Hong Kong (China)
• VMS Group
• Fundraising
• Family office
• Fund-of-funds