by Stephen Aldred
Boyu Capital, a China-focused private equity firm co-founded by the grandson of former Chinese president Jiang Zemin, could come to the market to raise a dollar fund of as much as USD 2bn next year, a source close to the situation said.
This would be Boyu’s third US dollar fund, and follows swiftly from a USD 1.5bn fund closed early in 2014 and which is already around 70% deployed, the source added.
Boyu has also raised two separate local currency renminbi funds to enable it to do onshore deals, as well as secondary buyouts from Chinese RMB funds, and also to be involved in going private bids which require local currency financing, the source said.
While private equity investors, or limited partners (LPs) have become wary of investing in firms with princeling ties, due to the ongoing crackdown in China by Xi Jinping, those same investors regard Boyu as among the best connected firms in China, with a strong bench of professionals, and it has moved rapidly to deploy its last fund.
The firm’s investments in China include the logistics space, through a 2014 Investment into Singapore-listed warehouse company Global Logistic Properties, travel and tourism, through a 2013 investment into Tongcheng Network Technology, duty free retail, through Sunrise Duty Free, in technology through a 2012 investment in Alibaba Group, distressed debt through a pre-IPO investment in China Cinda Asset Management, and food production through a 2014 consortium investment in COFCO Meat alongside KKR & Co, Baring Private Equity Asia, and Hopu Investments.
Established in Hong Kong in 2010, Boyu’s partners include Alvin Jiang, the grandson of Jiang Zemin, Sean Tong, a top China dealmaker and former senior executive at General Atlantic in the US and Providence Equity Partners in Hong Kong, Mary Ma, a former CFO at Lenovo Group and former senior executive at TPG Capital, and Louis Cheung, the former executive director of Ping An Insurance Group of China.
“If the fund came to the market right now, they would not want to raise more than USD 2bn,” the source said. “It could be USD 1.5bn, up to USD 2bn. You don’t want to take on more money than you can deploy. Next year it might be different, if they see an immediate opportunity, or a need to hire more people, and if they feel they could deploy that money rapidly,” the source added.
Boyu is currently among a consortium bidding to take WuXi PharmaTech private at a valuation of around USD 3.2bn. The buyout consortium includes the company founder, Ge Li, Boyu, Temasek, an investment unit of Ping An, and Ally Bridge. The buyout is backed by an underwritten financing of USD 1.1bn from Shanghai Pudong Development Bank and Ping An Bank.
Boyu’s first USD fund raised USD 1bn in 2011, with investors including Singapore sovereign wealth fund Temasek, an investment fund of Li Ka-shing, and funds of George Soros.