China’s HAO Capital Plans to Launch Third US Dollar Fund

China-focused private equity firm HAO Capital is reported be launching its third US dollar fund this year, writes reuters. Founder and partner Elaine Wong, who previously worked at the Carlyle Group, said two thirds of HAO Capital’s second dollar fund had been invested, and added that she expects two portfolio companies to conduct IPOs in China this year, reports reuters.

Reuters – China-focused private equity firm HAO Capital plans to launch its third U.S. dollar fund this year as it eyes more exit opportunities in China for its portfolio companies amid sluggish markets overseas, a senior executive said.

Founder and partner Elaine Wong, who previously worked at the Carlyle Group, gave no timetable for the fund launch, but said two thirds of HAO Capital’s second dollar fund had been invested, adding she expects two portfolio companies to conduct IPOs in China this year.

Wong warned, however, that China’s private equity industry faces headwinds ahead and should not rely too much on initial public offerings.

“The industry should consider various channels of exit,” Wong said. “The IPO market this year is likely to remain sluggish … and the domestic private equity market will witness a shake-up.”

China’s private equity boom started immediately after the 2008 global financial crisis, spurred by a flurry of IPOs following the launch of the Nasdaq-style ChiNext board and Beijing’s massive economic stimulus.

But the market, dominated by funds seeking easy and quick money from exits through IPOs, cooled abruptly in the second half of last year as China’s stock market slumped.

Wong said China’s private equity industry is too reliant on IPOs, and expects to see an increase in exits through acquisitions this year amid market weakness.

HAO Capital was founded in 2005 and manages about $500 million in two dollar funds, whose investors include high net worth individuals as well as institutions such as JPMorgan Chase & Co, Adveq and Goldman Sachs.

The funds have invested in nearly 20 companies, five of which had already listed overseas and this year, two portfolio companies, including a pharmaceutical firm and a furniture maker, plan to launch IPOs in mainland China, Wong said.

HAO Capital will consider more exits in China going forward due to brighter listing opportunities in the country at a time when economic conditions in the United States and Europe are anemic and capital markets abroad are sluggish, she added.