AVCJ China Awards: RMB Fundraising of the Year – Cowin Capital

The significance of this fundraise, however, is arguably in what it allows Cowin to do next. The firm has reached a critical mass by attracting LP commitments from high net worth individuals. Now it is looking to embrace international private equity practices with a view to reaching out to institutional investors.

"The majority of the LPs in our renminbi-denominated funds are still individual investors," says Alex Zheng, CEO of Cowin Capital. "In our future fundraising, we will try to take in more institutional investors, both locally and globally."

Cowin was among the early movers in China's domestic venture capital space, launching its debut Nanhai fund in 2007 with a target size of RMB250 million. This vehicle was the first domestic limited partnership to emerge after the government revised regulations on partnership enterprises, enabling domestic partnership funds to be treated as pass-through vehicles for tax purposes. This meant that different kinds of investors could participate more easily.

Since then, Cowin has raised four more vehicles in as many years. Nanhai Growth Fund V, which was named Fundraising of the Year - Renminbi at the AVCJ China Awards, targets investments in consumer goods, biomedicine, clean energy automobiles, energy conservation and advanced manufacturing.

Cowin raised most of the corpus directly and through its strategic partners, while also employ placement agents to help with the rest. Its fundraising efforts stood out due to the relatively transparent way in which they were conducted.

Cowin set a participation threshold for LPs - at least RMB20 million from individual investors and RMB30 million from institutions - in a bid to make the investor base more manageable. The firm also published a detailed investment strategy, stating that it would only back companies that had track records of more than 12 months, valuations in excess of RMB50 million, and realized profits.

The ultimate objective in presenting a clean face to the world is to tap overseas LPs for a US dollar-denominated fund. This has become a priority for a domestic managers who have witnessed the defaults that followed the flood of inexperienced investors into renminbi funds and now see the benefits of a more mature LP base.

"We are in the process of raising our first US dollar offshore fund recently," Zheng adds. "In the future, Cowin will keep trying to provide good returns for our investors, as well as offering opportunities for strategic cooperation."

The firm is also nearing a close of RMB300 million for a new venture capital fund that will target early- to mid-stage companies in fast-growing industries.

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• Topics
• Performance
• Fundraising
• Greater China
• Renminbi fund
• AVCJ Awards
• Fundraising
• Cowin Capital
• China