Not Just Pocket Change: China's Hillhouse Capital's New Fund Has $10.6 Billion to Invest


China’s Hillhouse Capital Group, an equity investment firm, has a new fund, Hillhouse Fund IV, with $10.6 billion ready to invest. The close of this new fund makes it the biggest capital raise by a private-equity company in Asia.

Hillhouse plans to invest in companies focused on healthcare, consumer, technology and services sectors globally, although mostly in Asia. It has made investment in well-known companies like search engine Baidu, AirBnB and Uber Technologies.

In the biopharma arena, it co-led a series C financing round in biotech company Jacobio Pharmaceuticals in August worth $55 million and led a $35 million series B+ round in Hangzhou Just Biotherapeutics in June.

It was also part of a group of investors that in 2015 delisted China’s biotechnology company WuXi AppTec from the New York Stock Exchange with its founder Li Ge and took the company private in a $3.3 billion deal. WuXi AppTec has recently applied for an initial public offering (IPO) in Hong Kong. WuXi AppTec began trading on the Shanghai Stock Exchange in May.

WuXi AppTec was founded in 2000 in Shanghai. Since it began trading on the Shanghai Stock Exchange, its shares have almost quadrupled, giving it a market value of $13 billion.

Hillhouse Capital Group was founded in 2005 by Zhang Lei, a Chinese investor and entrepreneur. He also acts as its chief executive officer. Zhang holds master’s degrees from Yale University, where he also performed an internship with the college’s endowment. The endowment later granted him $20 million in seed funding.

In a June 2017 speech Zhang gave at his undergraduate alma mater, Renmin University of China in Beijing, Hillhouse manages around $30 billion in assets.

“We are deeply grateful for the ongoing trust of our partners,” Zhang said in a statement, regarding the new fund. “We look forward to working with innovation-minded, world-class businesses and management teams seeking to deploy technology-driven solutions to create value for all stakeholders.”

Reuters reports, “The Hillhouse fund adds to a massive industry-wide pool of money for Asian acquisitions and investments, with investors attracted by rapid economic growth and a growing number of technology companies compared to other major markets.”

For example, in June, Blackstone Group raised about $9.4 billion for two new funds.

Previously, in June 2017, the largest fundraising by a private equity firm in Asia was KKR & Co’s Asia-focused buyout fund, which closed on $9.3 billion.

Earlier this year, Hillhouse led a group of investors in an attempt to acquire Yum China Holdings in an all-cash deal worth more than $17 billion. Yum China is the country’s largest restaurant operator, holding licensed to KFC, Pizza Hut and Taco Bell in the country. However, Yum China’s board rejected the bid.

Per an August Financial Times report, since 2012, research and development cooperation between U.S. companies and China are up 70 percent. The Chinese biopharma industry is booming. Examples include China’s BeiGene partnering with SpringWorks Therapeutics to focus on solid tumors. And in August, WuXi’s subsidiary, Shanghai Syntel Pharmaceutical Co., Ltd., a opened a site in San Diego to provide process research and development in addition to API manufacturing services for early phase clinical studies. WuXi also has partnerships with several U.S. companies, including Unity Biotechnology, IDEAYA Biosciences, and Juno Therapeutics.

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