China GP Tiantu Capital targets $253m Hong Kong IPO

The Shenzhen-based GP is offering about 173m shares at HKD 5.80 to HKD 11.40 apiece. The listing date has been set for October 6.

Tiantu chairman Yonghua Wang holds about 227m shares directly and via two separate entities, giving him a 43.7% equity interest in total. Chinese asset manager Paladin has 78m shares, or 15%.

There are two cornerstone investors, Futian Guiding Fund, an existing LP, and Qingdao Investors. They have subscribed for a total of about USD 78.1m worth of shares, which will give them positions of about 7% and 8%, respectively.

It is unusual for a firm of Tiantu's size to want to list, but it extends a recent spate of similar activity. As recently as last week, Japanese middle-market investor Integral Corporation completed a JPY 18bn (USD 121m) IPO.

Pan-regional player PAG, with USD 17bn in assets under management, filed for a Hong Kong IPO in March 2022 but the offering has since been put on hold. 

Tiantu said in a prospectus that it would use the proceeds to expand its private equity business, develop its direct investment business, and cover general corporate expenses. It added that scattered resurgences of COVID-19 impacted its investments and fund performance in 2022.

The firm recorded a decline in net profit from about CNY 1bn (USD 145m) to CNY 720m in 2021 and CNY 533m in 2022. It posted a net loss of CNY 81m for the first three months of 2023.

During the same three years, assets under management (AUM) increased from CNY 20.2bn to CNY 24.9bn and then CNY 25.1bn. As of March, AUM stood at CNY 25.5bn, with CNY 20.4bn in funds and the rest in direct investments.

Tiantu has managed 11 funds since 2014, including eight renminbi-denominated and three US dollar vehicles. In total, they represent CNY 13.5bn in committed capital and have an average IRR of 16%.

The first US dollar fund launched in 2014 and closed on USD 113m. Its successors closed on USD 200m and USD 139m. Fund I had generated a gross IRR of 17.2%, a multiple on invested capital (MOIC) of 3.2x, and distributions to paid-in of 7% as of March.

Fund II, launched in 2018, was on an IRR of 12.2% and an MOIC 1.4x. The comparable figures for Fund II, a VC vehicle from the 2019 vintage, were 20.9% and 1.4x. Neither fund had made any distributions to investors.

On the renminbi side, a CNY 1.2bn fund from 2017 called Tiantu Dongfeng had the best performance with an IRR of 40.7% and an MOIC of 4.4x. The largest growth-stage fund is Tiantu Xingbei, which raised CNY 5bn in the 2015 vintage. Its IRR, MOIC, and DPI were 5.3%, 3.2x, and 8%.

Tiantu closed its largest early-stage fund, Tiantu Xingzhou, last April on CNY 1.5bn.

The firm focuses on technology-enabled solutions around consumption, supply chains, cross-border expansion, and biotech. It has backed more than 200 companies, including dairy brand China Feihe, bubble tea chain Nayuki, fruit distributor Pagoda, and braised duck restaurant chain Zhou Hei Ya. All four ended up going public in Hong Kong.

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• Topics
• Greater China
• GPs
• Performance
• IPO
• China
• Hong Kong (China)
• Tiantu Capital
• IPO