CDH to close upsized Fund V at $2.55b

"First, companies are larger," he said. "Look at Focus Media - we bought a 10% stake in that company for $6 million in 2004; now you probably wouldn't get 10% for $200 million. Second, we have more people. In Fund I and II, five of us were leading deals. Now we have 12-13 guys doing that. Third, our average deal size is about $100 million. If you do eight deals, that's $800 million, and over a four-year commitment period, it's $3-3.5 billion. If you combine the dollar and renminbi funds, we are comfortable with fund size."

CDH's fourth US dollar-denominated fund reached a final close of $1.46 billion in April 2010. Fund V is scheduled for final close of $2.55 billion due on February 7.

The GP, which manages assets across private equity, venture capital, real estate, listed equities and high-yield mezzanine, has raised two renminbi funds in addition to the US dollar vehicles. The second of these closed in 2012 at RMB8 billion ($1.3 billion), twice the size of its predecessor.

Fund V launched in September 2012 with an initial target of $2 billion and a hard cap of $2.5 billion. A first close of $1 billion came on February 8, 2013 and CDH had one year from that date to complete the fundraising process. It has not applied to LPs for an extension, but won approval to raise the hard cap slightly in order to accommodate investor demand.

The fund also surpasses the $2.36 billion Hony Capital raised for its fifth US dollar fund, which closed in January 2012.

According to a source familiar with the fundraise, the LP base is one third North American, one third European and Middle Eastern, and one third Asian. There will be around 60 investors in total, with pension funds, insurance companies and sovereign wealth funds featuring more prominently than in previous funds. In many cases these groups are making their first direct commitment to a China-specific GP.

The source adds that a lot of the new money comes from Asia - emerging markets investors generally seen as more comfortable with the risks tied to minority investments that still dominate the China deal landscape.

While growth remains a prevalent theme, CDH is also looking at control deals. In the past 12 months, the GP has purchased majority stakes in Hong Kong-listed auto after-sales service provider New Focus Auto and apparel manufacturer Baroque Japan. Baroque also touches on another theme, cross-border transactions, with CDH planning to ramp up the retailer's China presence.

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• Topics
• Fundraising
• Greater China
• Expansion
• Buyout
• China
• CDH Investments Management
• Fundraising
• buyout