CITICPE closes third China dollar fund above hard-cap – exclusive

CITICPE has held a final close above its $2.2 billion hard-cap for its third and largest China-focused flagship vehicle, Private Equity International has learned.

The Beijing-based firm, which ranks 88th in the PEI 300 listing, launched CPE China Fund III in the fourth quarter of last year with a $2 billion target and held a first close on $1.8 billion in March. It is unclear how much capital was raised for the fund.

CPE China Fund III received commitments from existing investors such as AP Fonden 2, Pantheon and Lockheed Martin, a source familiar with the fundraising told PEI.

Unlike CITICPE’s previous US dollar-denominated vehicles, which were mainly backed by Asian sovereign wealth funds, PEI understands Fund III has a more diversified LP base, with commitments from funds of funds, financial institutions, university endowments, public pensions and corporate pensions, as well as new LPs such as global insurance companies with a presence in Asia.

Asia-based LPs account for 40 percent of Fund III’s investor base and the remaining 60 percent are from North America, Europe and the Middle East.

Fund III will have a similar strategy to its predecessors, focusing on buyout opportunities across six sectors: technology and internet, industrial and energy, financial and business services, consumer and leisure, medical and health, and real estate.

PEI understands that Fund III will be invested alongside a yuan-denominated vehicle in the coming years. It is unclear how much the firm is targeting for the yuan-denominated vehicle.

Fund III will deploy 70 percent of its capital into buyouts in China’s traditional industries, while the remaining 30 percent will be invested in significant minority growth interests in TMT, biopharma and healthcare, the source noted.

Fund III’s predecessors, the 2015-vintage $1.3 billion CPE China Fund II and the 2011-vintage $990 million CPE China Fund have delivered a gross money multiple of 4.5x and close to 2x, respectively. Both funds generated more than 35 percent gross internal rate of return to date, the source added.

CITICPE has more than $15 billion in assets under management and has a staff of 150 across its Beijing and Hong Kong offices.

The firm’s portfolio includes Shanghai-based CStone Pharmaceuticals, hardware company Deerma and meal ordering services company Ele.me

Réal Desrochers, former head of private equity at the California Public Employees’ Retirement System, joined the firm as managing director in April last year. It is understood Desrochers is responsible for strategy development, risk management and establishing a US outpost for the firm.

CITICPE declined to comment on fundraising.