Hony targets $2.6bn fifth USD fund

The Chinese firm, founded by John Zhao, is targeting almost twice the size of its fourth USD fund, which closed on $1.4bn.

Chinese private equity heavyweight Hony Capital is targeting $2.6 billion for its latest USD-denominated fund, a LP source told PE Asia.

Hony declined to comment.

A spokeswoman for the firm confirmed the fundraising plan to PE Asia in June but did not elaborate on the fund size. Hony’s fourth USD fund closed on $1.4 billion in 2008.

If successful, it would mark the largest fund ever raised by a China-based private equity firm. The spot at the top of the podium is currently occupied by Hopu Investment, which raised $2.5 billion for its maiden fund in 2008 with backing from Singaporean sovereign wealth fund Temasek Holdings and Goldman Sachs.

John Zhao

The source said he believed Hony would be able to collect $2.6 billion eventually but it would take longer than originally planned. He noted that the firm was looking at a final close by the end of the year.

According to a Reuters report, a small portion of the fund would be used for overseas investment.

Although the firm has set out to be a China-focused manager, it made a Japan debut in July by investing ¥1.4 billion (€12.5 million; $17.8 million) for a 20 percent stake in Tokyo Stock Exchange-listed Tokai Kanko, which is mainly involved in accommodation and real estate development. In October last year, the firm became the largest shareholder of Singapore-listed medical device manufacturer Biosensors International by pouring in S$283.8 million.

Hony closed its second RMB fund earlier this year on the hard-cap target of RMB10 billion. Currently it has $4.4 billion of assets under management across four USD funds and two RMB funds.