
Forebright raises $502m for third China fund

China-focused Forebright Capital has closed its third fund with USD 502m in commitments. The manager claimed to have spent about a year in the market.
Forebright New Opportunities Fund III, which launched with a USD 500m target, received support from the likes of pension funds, endowments, asset managers, fund-of-funds, and family offices. German development finance institution DEG is among the LPs that have disclosed their involvement. It contributed USD 30m.
DEG was also an investor in Fund II, which closed on USD 285m in 2019. Forebright was formed in 2014 through a spinout from China Everbright International and raised USD 400m for its debut fund.
The firm concentrates on growth-stage advanced manufacturing and enterprise software companies. The Fund III portfolio already features NASDAQ-listed semiconductor manufacturer O2Micro International and memory card producer Exascend.
Forebright has completed several take-privates of listed Chinese companies in the same vein as O2Micro. For example, Jinpan International, a manufacturer of electric transformers, was delisted in the US in 2016 at a valuation of around USD 98m. It relisted on China’s A-share market in 2021 and now has a market capitalisation of CNY 13.8bn (USD 1.9bn).
Other technology hardware portfolio companies that have gone public in China include chipmakers Beken Corporation and Amlogic, electric motor components supplier Jing-Jin Electric Technologies, and wind turbine manufacturer Goldwind Science & Technology.
On the enterprise software side, Forebright has backed the likes of cloud software providers Kingsoft Cloud and Mingyuan Cloud and IT services specialists Yusys Technologies and iSoftStone Information Technology Group. The latter traded in the US until 2014 when Forebright supported a privatisation. It was relisted in Shanghai last year.
"We extend our heartfelt appreciation for the unwavering support and confidence shown by our investors, particularly in the face of these unprecedented times,” Ling He, a managing partner at Forebright, said in a statement.
“This achievement underscores Forebright's strengthened team, disciplined investment approach, exceptional track record, and the compelling opportunities within our specialised domains."
Raising capital for China funds is proving especially challenging as LPs move to risk-off mode and many US investors scale back commitments to the country amid geopolitical tensions. About USD 21.5bn was committed to US dollar-denominated China funds last year. The running total for 2023 is approximately USD 6.1bn, according to AVCJ Research.
Eaton Partners and Kirkland & Ellis served as placement agent and legal counsel, respectively, for Forebright New Opportunities Fund III.
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