Chinese PE giant braves uncertain fundraising environment to launch debut USD strategy

CS Capital will target growth equity investments across the electric vehicle and healthcare-related sectors in Greater China.

CS Capital, a Chinese private equity firm with 102 billion yuan ($15.2 billion; €14.5 billion) of assets under management, is launching a debut USD-denominated fund at a time when international appetites for the market are uncertain, Private Equity International understands.

The Beijing-headquartered firm is in pre-marketing and has set a $1 billion target, according to a source with knowledge of the fundraise. The fund will target growth equity investments across the electric vehicle and healthcare-related sectors in Greater China.

CSC has raised two RMB-denominated funds to date: a 50 billion-yuan 2019-vintage, and a 20 billion-yuan 2015-vintage, the source said. LPs include China’s BYD, the world’s largest electric vehicle manufacturer; the National Council for Social Security Fund of China; Industrial and Commercial Bank of China; insurers; and various state-owned enterprises.

CSC declined to comment.

The fact that CSC is so large, yet comparatively unknown in the West, is not unusual for China, which is awash with recondite fund managers. Previous estimates put the number of firms in China anywhere between several hundred to the tens of thousands, according to the Cheung Kong Graduate School of Business.

The fundraise comes amid an uncertain period for some China-focused strategies. Appetites for the domestic private equity market have waned in some quarters, following a regulatory crackdown on popular sectors, including online education and consumer technology, last summer.

CSC’s focus on electric vehicles may prove advantageous on the fundraising trail. China is a big proponent of the sector and wants electric vehicles to account for 20 percent of all new car sales by 2025, according to its 2021-35 new energy vehicles development plan.

The firm’s RMB portfolio includes BYD, drug manufacturer Innovent and electric scooter maker Segway-Ninebot, per its website.

China-headquartered private equity firms collected just $4.3 billion in the first quarter of 2022, less than half of the $8.8 billion gathered in the same period last year and further below the $9.1 billion raised in Q1 2020, according to PEI data.

“Ninety percent of LPs we’re talking to at the moment are saying they’ve put China on pause,” Niklas Amundsson, a Hong Kong-based partner at placement firm Monument Group, told PEI in December

“It is really a challenge – some funds in market are not even seeing re-ups. If you had set out fundraising before all of this happened, you’d have probably been quite ambitious. These fundraisings will need to close at some point and could do so below target.”