Emerald Hill closes $400m fund

The Asia-focused fund of funds has closed its third vehicle on target.

Emerald Hill Capital Partners has raised just over $400 million for its third fund of funds targeting private equity opportunities in Asia’s emerging economies, according to a statement.

The firm, which raised $300 million for its predecessor vehicle in 2010, had a “strong, continued backing from endowments and foundations”, which make up around 80 percent of its investors.

About 75 percent of its existing LPs re-upped for the vehicle, according to the firm. 

The fund of funds will focus mostly on GPs in Greater China, the Indian subcontinent and Southeast Asia, where more than 90 percent of the firm’s capital has been invested to-date. Emerald Hill plans to invest in a more concentrated portfolio of smaller private equity funds in the region, across venture capital, growth and buyout segments.

“Over 75 percent of our capital has been committed to funds smaller than $500 million in size and, in fact, more than half our capital has been committed to funds smaller than $300 million in size,” Eugene Choung, co-founder of Emerald Hill told Private Equity International.

“Although the macro environment has seen many changes since the time of our second fund, we have a similarly positive outlook for the return prospects of EHCP III.”

While funds of funds globally are going through a difficult time, many consolidating or being folded into larger institutions, Emerald Hill is one of two Asia-focused players that have raised funds successfully recently.

Asia Alternatives, another Hong Kong-based fund of funds with an office in San Francisco, has raised $270 million towards its latest fundraising effort, targeting $750 million for its Asia Alternatives Capital Partners IV and related entities, PEI reported last week.

“The fundraising environment for smaller funds in Asia has been challenging, both for funds and for funds of funds. Private equity capital has made a profound shift out of emerging markets to more developed countries over the past year and much of the capital that remains focused on Asia seems to favor larger brand-name funds – as can be witnessed by the fundraising success of many of the larger funds in Asia,” Choung explained.

Fundraising by funds of funds in Asia has slowed of late, with such funds raising just $900 million across nine vehicles in 2013, the lowest totals in three years, according to PEI’s Research & Analytics division.

In Europe, by comparison, 10 funds of funds raised $3.2 billion and in North America (including separate accounts) 51 funds raised $9.5 billion.

Choung added, “However, we continue to believe that the overlooked smaller end of the market still provides the greatest promise for outsized returns, although manager selection will be tantamount to capitalising upon this opportunity.”

Established in 2005, Hong Kong-based Emerald Hill now has over $1 billion in assets under management.

The firm has a second office in Denver, Colorado and is led by Eugene Choung, who previously served as head of private equity for the University of Chicago Endowment Fund, and three other partners, Michael Smith, Tommy Yip and Alexander McCloskey.