Hillhouse collects $10.6bn for largest ever Asia fund

The tech-focused manager’s fourth vehicle has surpassed KKR’s record-breaking $9.3bn Asian Fund III.

Hillhouse Capital Group has held the final close on the largest-ever private equity fund focusing on Asia.

The Asia-based firm amassed $10.6 billion for Hillhouse Fund IV, according to a statement. Fund IV is about 15 percent larger than KKR’s Asian Fund III, which closed on $9.3 billion in June last year.

The fund was heavily oversubscribed and capital raising was “a quick process” as most investors re-upped, a source with knowledge of the matter told Private Equity International. It is unclear when Hillhouse began fundraising for Fund IV and the firm declined to comment on the matter.

Fund IV is more than five times larger than Fund II, a 2015-vintage vehicle that raised $2 billion, according to PEI data. It is unclear how much the firm raised for Fund III; Fund IV’s original target was $6.5 billion, according to a report by the Financial Times.

Endowments, sovereign wealth funds, large financial institutions and pensions backed Fund IV. These include San Francisco Employees Retirement Fund with a $100 million commitment and Texas County and District Retirement System with an $85 million commitment, according to PEI data.

Fund IV will make innovation and technology-driven investments across healthcare, consumer, technology and services sectors. It will also have the flexibility to invest across the equity spectrum, from seed investments to buyouts and listed equities, the statement noted. Similar to its previous funds Fund IV will have no constraints in terms of geographical allocation and can back companies in countries outside of Asia such as Germany, the source added.

Hillhouse’s portfolio includes house rental firm Airbnb, Beijing-based biopharma company Beigene and Chinese ride hailing giant Didi, according to the statement.

Last year Hillhouse teamed up with Chinese manager CDH Investments for the $6.8 billion take-private of shoe retailer Belle International, with plans to revitalise the business with new technology.

It was also the lead investor in the $17.6 billion take-private offer of NYSE-listed Yum China Holdings, the operator of Pizza Hut, Taco Bell and KFC franchises in mainland China, according to media reports. The investor group reportedly included KKR, Baring Private Equity Asia and sovereign wealth fund China Investment Corporation. Yum China rejected the offer for undisclosed reasons.

Hillhouse was founded in 2005 by Zhang Lei, who previously worked for Yale Endowment and a global emerging market fund covering South Africa, South-East Asia and China, according to the firm’s website. The firm has more than $50 billion in assets under management across private equity, real estate and venture capital, it said in a statement.