HONG KONG (Reuters) – Chinese firms Primavera Capital Group and CITIC Private Equity plan to raise new dollar-denominated funds totaling around $5 billion in a bid to bolster their firepower for offshore investments, six sources told Reuters.
Over the past year, private-equity (PE) firms have become increasingly active in overseas dealmaking, enjoying greater flexibility with offshore fundraising abilities versus the more domestically-focused firms that have been hit by Beijing’s measures to curb a rampant outflow of capital.
Primavera, run by former Goldman Sachs (GS.N) Greater China Chairman Fred Hu, aims to raise around $2.8 billion in its third fund and has started tapping prospective investors, known as limited partners (LPs), one of the sources said.
The official fundraising has not been launched and the fund size is yet to be finalised, another source said.
CITICPE, the investment arm of China’s top brokerage CITIC Securities (600030.SS), is looking to raise around $2 billion and is targeting an early 2018 first close – an important milestone indicating the fund has crossed a minimum threshold and can begin making investments, another source said.
CITICPE confirmed the fundraising plan, saying the fund was officially launched in September 2017.
The fund, which has a hard cap set at $2.2 billion, is significantly oversubscribed and targeting a final close in the first half of next year, it told Reuters in an email.
Primavera declined to comment.
The two firms will join a slew of Chinese PE companies, such as Hony Capital, FountainVest Partners and China Media Capital, that have raised dollar funds since last year, according to data provider Preqin.
As of August, Greater China-based PE firms had targeted to raise $25.9 billion in 26 buyout funds, and an aggregate of $48.3 billion in 42 growth funds, Preqin data shows.
Acquisitions made by Chinese PE firms amounted to $21.5 billion as of Monday, with the number of outbound deals jumping over 50 percent from a year ago, Thomson Reuters data shows.
“For minority stake deals, we prefer investing together with a strategic player for overseas M&A,” said Dasong Wang, CITICPE’s managing director and head of the pharmaceuticals investment team. “But we’d only acquire overseas companies that have synergy with China.”
CITICPE said it would use the new fund to pursue growth and buyout opportunities across five core sectors – technology and internet, industrial and energy, financial and business services, consumer and leisure, and healthcare.
The fund will likely attract Singapore’s state investors GIC [GIC.UL] and Temasek [TEM.UL] as investors, said one of the sources. GIC did not respond to a request for comment. Temasek declined to comment.
All six sources, with direct knowledge of the fundraising plans by Primavera and CITICPE, declined to be named as they were not authorized to speak to media.
Founded in 2008, CITICPE has nearly 100 billion yuan ($15 billion) worth of assets under management and has invested in more than a 100 companies, its website shows. It counts global sovereign wealth funds and state pension funds as investors.
Its portfolio firms include biotechnology company 3SBio Inc (1530.HK), ride-hailing firm Didi Chuxing, bike-sharing startup Ofo and food delivery app Ele.me.
For Primavera, top deals include its role as a pre-listing investor in Alibaba Group Holding (BABA.N) and stakes in Alibaba units, including Ant Financial and logistics arm Cainiao.
It also teamed up with Ant Financial last year to buy a stake in Yum Brands’ (YUM.N) spunoff China business for $460 million.
Its investors include Second Swedish National Pension Fund, Pennsylvania State Employees’ Retirement System, Taiwan
Semiconductor Manufacturing (2330.TW), Metlife Inc (MET.N), AIA Group (1299.HK) and Bank of China Ltd (601988.SS).