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New York State backs China-focused KKR spinout for $25 mln

  • New fund led by David Liu, Julian Wolhardt
  • Both left KKR at the end of 2016
  • Dehong Capital to invest in Chinese buyouts

New York State Common Retirement Fund committed $25 million to a new China-focused vehicle managed by two former Kohlberg Kravis Roberts & Co executives.

David Liu and Julian Wolhardt left KKR at the end of 2016 to launch Dehong Capital, which China Money Network reported would focus on investments in consumer, healthcare, education, environmental and internet companies.

Liu reportedly told Chinese media he was interested in pursuing buyouts of family-owned businesses, as well as public companies and special situations.

The firm registered its first dedicated investment vehicle, DCP Capital Partners LP, with the SEC in early December. It’s unclear how much Dehong plans to raise through the vehicle, which is domiciled in the Cayman Islands.

A KKR press release issued around their departure indicated both Liu and Wolhardt would continue to work with the firm in an advisory capacity.

“We are extremely proud to have been part of KKR over the last 10 years and to have contributed to building a leading Asian private equity platform. As we go on to pursue our own entrepreneurial venture, we look forward to finding opportunities to work in partnership with KKR in the future,” Liu and Wolhardt said in KKR’s August 2016 statement.

Dehong Capital did not respond to a request for comment.

New York State Common Retirement Fund is likely familiar with Liu and Wolhardt’s track record, having committed almost $500 million to KKR’s Asian buyouts platform since 2007. The $201.3 billion retirement system sourced its commitment to Dehong Capital through a fund-of-funds managed by Asia Alternatives, an investment disclosure shows.

Asia Alternatives also directed $350 million of NYS Common’s committed capital to a new $6 billion flagship buyout fund managed by Affinity Equity Partners. Affinity, which focuses on buyout investments in the Asia-Pacific region, reportedly closed the fund around the start of the year.

NYS Common Retirement Fund held 7.8 percent of its assets in PE as of September 2017.

Action Item: To see Dehong Capital’s Form D, visit http://bit.ly/2H95lQp

US$100 and Chinese 100-yuan banknotes are seen in this picture illustration in Beijing on Jan. 21, 2016. REUTERS/Jason Lee