Warburg Pincus Looks to Raise $2 Billion for New China Fund
March 24 2016 - 11:30AM
Dow Jones News
Warburg Pincus LLC is seeking to raise $2 billion for a new
China private-equity fund, giving the early investor in China more
firepower to cut deals in the country, according to people familiar
with the situation.
The new China fund will invest alongside Warburg Pincus's latest
$12 billion global fund, raised in November. The China fund and the
global fund will split Warburg Pincus' future Chinese investments
evenly, meaning the U.S.-based private-equity firm's China
"companion" fund will give it a combined $4 billion of capital
aimed at China deals. That would it on par with some of the larger
private-equity investors in the region.
The fresh fundraising plan comes as private-equity managers have
raised large sums of money to invest in Asia, particularly China.
Hong Kong-based PAG raised $3.6 billion in December for a new
pan-Asia buyout fund, after former Goldman Sachs Group Inc. banker
Richard Ong's RRJ Capital raised $4.5 billion for a new
Asia-focused private-equity fund in September.
Investors have clamored to put money into private technology
deals in China in the past few years, reaping high returns on deals
involving e-commerce firms like Alibaba Group Holding Ltd. and
JD.com Inc. before their initial public offerings. The market for
those deals has dried up recently as China's economy slows and
investors reassess the prospects of richly valued startups.
Warburg Pincus is still at the early stages of raising the new
fund. It plans to launch the fundraising formally on June 1 and
aims to close the fund by December, one person familiar with the
situation said. A spokeswoman for Warburg Pincus declined to
comment on the fundraising plans.
Private-equity investors poured the most money into China among
Asia-Pacific countries last year. China attracted $41.1 billion of
private-equity investment last year, compared with $2.9 billion for
Japan and $12.8 billion for India, according to data from the
Centre for Asia Private Equity.
Founded in 1966, Warburg Pincus was an early mover into emerging
markets including China and India. It has investments in China's
health care, consumer, energy, financial and property sectors. In
January, Warburg Pincus was among a group of investors in advanced
discussions to put money into WeBank, the online banking affiliate
of Chinese Internet giant Tencent Holdings Ltd., people said at the
time.
Warburg Pincus's current China investments include stakes in
China Huarong Asset Management Co., Chinese car-rental company Car
Inc. and private hospital Beijing AmCare Women's & Children's
Hospital.
Warburg Pincus invested around $680 million in 2014 into China
Huarong, which was one of the asset-management companies set up in
the late 1990s to clear bad debt off the books of Chinese state
banks ahead of their initial public offerings. At China Huarong's
current share price, the private-equity firm's stake is worth
around $754 million.
The U.S. private-equity firm has been among the global investors
most eager to put money into Chinese logistics operations. Those
companies have been favorites of private equity-firms because they
benefit from the growth of e-commerce in China, but generate strong
cash flow that is more stable than Internet startups. Two of the
logistics companies Warburg Pincus invested in—Shanghai e-Shang
Warehousing Services Co. and ZTO Express—are planning IPOs later
this year, people familiar with the situation said previously.
In 2015, Warburg Pincus sold its remaining stake in 58.com Inc.,
a New York-listed Chinese equivalent of the U.S. website
Craigslist, as well as some of its shares in Car Inc. and plasma
products manufacturer China Biologic Products Inc.
Write to Kane Wu at Kane.Wu@wsj.com
(END) Dow Jones Newswires
March 24, 2016 11:15 ET (15:15 GMT)
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