China's Capital Today targets evergreen fund

Several investors told AVCJ that Kathy Xu, Capital Today's founder, had raised the prospect of an evergreen structure. According to a term sheet seen by Reuters, the fund is targeting $400 million and will have a lifespan of 28 years. It will charge the typical 2% management fee.

Evergreen funds appeal to LPs who are comfortable holding investments for long periods of time. It requires a very high level of comfort with the manager and strategy.

In the case of Capital Today, which has backed a number of successful Chinese technology companies from their nascent stages, it presents the opportunity to retain exposure to businesses with long growth trajectories. Evergreen funds are also under less immediate pressure to secure exits with a view to raising successor vehicles, which had lead to assets being sold at a discount.

Xu set up Capital Today in 2005 after departing Baring Private Equity Asia. The Capital Today China Growth Fund closed the same year at $280 million and a second fund drew commitments of $400 million to close in 2010. According to AVCJ Research, LPs in the second vehicle are said to include Axiom Asia, Caledonia Investments and Perennius Capital Partners.

Capital Today was an early investor in e-commerce platform JD.com, committing $18 million to the company - then known as 360Buy - between 2007 and 2009. JD.com went public in the US last month, raising $1.78 billion, facilitating a partial exit for the PE firm and reportedly giving it an unrealized return of more than 100x.

Capital Today also invested in video sharing site Tudou.com, which listed on NASDAQ and subsequently merged with rival Youku.com.

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• Topics
• Fundraising
• Greater China
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• Expansion
• TMT
• Growth capital
• China
• Capital Today China Group Company
• Fundraising