FountainVest closes largest fund to date

The China-focused firm’s third fund scooped up $2.1bn, as chief executive Frank Tang said opportunities for value creation are 'more prevalent than before'.

China-focused private equity firm FountainVest Partners has held a final close on its third fund, FountainVest China Capital Partners Fund III, on $2.1 billion, the firm said in a statement.

Its predecessor, 2012-vintage FountainVest China Growth Capital Fund II, raised $1.35 billion.

In a statement, the firm said Fund III received strong support from its existing investors as well as a number of new institutional investors such as pension funds, sovereign wealth funds, and insurance companies from North America, Europe, Australia, Middle East and Asia.

Fundraising for Fund III began early this year with an undisclosed target, a spokesperson for the firm told Private Equity International. Fund III will have the same mandate as the firm’s earlier funds, targeting growth equity and venture capital investments in Chinese consumer goods companies.

Frank Tang, chief executive officer of FountainVest, said the firm remains confident about opportunities in China. “We believe that industry consolidations will intensify, mergers and acquisitions will create national leaders. In the context of an increasingly complex operating environment, opportunities for value creation through sector expertise and operational enhancement are more prevalent than before.”

The spokesperson added that the firm is in the final stages of investing Fund II as well as the 2008-vintage Fund I, which closed on $1 billion.

Among its recent investments are Shenzhen-listed outdoor advertising firm Focus Media, Beijing-based widescreen film provider IMAX China Holdings, and Michigan-based automotive components company Key Safety Systems.

Limited partners that have made commitments to FountainVest’s funds include the Canada Pension Plan Investment Board, Ontario Teachers' Pension Plan, and Temasek Holdings, according to PEI data.

FountainVest manages about $4 billion of assets. Its investment theme has been focused on the growing demands and rising aspirations of the Chinese middle class.