FountainVest reaches first close of $1b on second China fund
FountainVest Partners has reached a first close of just over $1 billion on its second China-focused fund. The vehicle has only been in the market for about four months, but it is already nearing its full target of $1.25 billion. Sources familiar with the fundraising process told AVCJ that the final figure could be as high as $1.35 billion.
Existing investors account for the bulk of capital accumulated for the first close. Ontario Teachers' Pension Plan (OTPP), Canada Pension Plan Investment Board (CPPIB) and Temasek Holdings were the anchor investors in FountainVest China Growth Capital Fund I, which closed in 2008 at $950 million. All three have re-upped for the second vehicle.
Another significant investor is Washington State Investment Board, which has committed $150 million this time around compared to $50 million in the first fund. San Diego County Employees' Retirement Association (SDCERA) has also revealed that it will invest $50 million.
UBS is once again serving as placement agent for FountainVest.
The private equity firm was set up in 2007 by Frank Tang, George Chuang, Chenning Zhao and Terry Hu, formerly colleagues at Temasek where they headed the China investment team. Investments tend to follow three key themes: the rise of the middle class and domestic consumption, urbanization and industrialization, and sustainable development.
The first fund generated a gross IRR of 33% and a gross multiple of 1.45x as of December 31 2011, according to marketing documents shown to prospective investors in May. At the time, FountainVest had 10 portfolio companies, including Central China Real Estate, web portal Sina, CITIC Pharmaceutical, Zhaoheng Hydropower, die casting manufacturer LK Technology Holdings, online diamond retailer Zbird and jewelry retailer Enzo.
There were two full or partial exits in 2011, generating a gross IRR in excess of 66%.
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