Fund focus: Maison in dollar fund breakthrough

With the days of easy renminbi fundraising long gone, more Chinese managers are trying to leverage their local currency track records to raise US dollar-denominated vehicles. It is not an easy process. Various GPs have been thwarted by limited knowledge of international fundraising norms, the language barrier, or a weakening investor sentiment on China. Maison Capital could therefore count itself among the luckier ones.

The private equity firm recently closed its first US dollar fund with $200 million after about two years on the road. The investor base comprises mainly institutional LPs, including the International Finance Corporation (IFC), Germany’s DEG, Italian insurer Generali, and Schroder Adveq.

“It was a difficult process, but because we have 14 years of investment experience and we have achieved exits through both onshore and offshore IPOs or other transactions, closing the fund seemed like a natural progression for us,” says Roger Wu, a partner at Maison.

The consumer-focused GP, which invests in early to growth-stage companies across the lifestyle, technology, and services segments, also manages three local currency funds with RMB1.5 billion ($228 million) in committed capital. Maison is perhaps best known for being the first institutional investor in drone manufacturer DJI in 2013. The company achieved a valuation of more than $8 billion in its most recent funding in round in 2015.

With the new fund, Maison plans to expand its coverage to include themes such as the Belt and Road Initiative, but consumer – specifically deals in the $10-20 million range – will remain the core strategy. “We are a consumer fund, we look at themes such as consumer technology, lifestyle and services such as healthcare, this is very much the strategy that we are going to use for the new fund,” he says.

Approximately one-third of the fund has already been deployed. Portfolio companies include Little Freddie, a UK-based organic baby food producer that sells most of its products to China, mainly through online channels. The company launched its own storefront on Tmall in 2015 and achieved RMB50 million in annual sales revenue through the website last year. Little Freddie recently signed a strategic agreement with Tmall to boost presence on the platform.

“Little Freddie has an established supply chain that extends from sourcing farm products to its own distribution channels in China. While it started off with only an online presence, it now has offline stores as well,” says Wu. “Companies these days can no longer only rely on traditional sales channels. They need to have multiple capabilities and think about how to leverage social media and e-commerce.”

Maison’s views on Little Freddie are shaped by a longstanding involvement in the Chinese baby products space. It previously invested in skincare business Elsker in 2007, exiting to Johnson & Johnson six years later with a 12.6x return.  

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• Topics
• Greater China
• Fundraising
• Growth
• GPs
• LPs
• China
• Maison Capital
• IFC
• German Investment and Development (DEG)
• Adveq Management AG