Inventis in $1bn first close on China fund

The Shanghai-based growth capital firm led by Kwek Ping Yong has reached a first close on its sixth fund, attracting mainly re-ups from the previous vehicle.

Shanghai-based Inventis Investment Holdings has reached a first close on $1 billion for its sixth China-focused fund, according to a source with knowledge of the matter.

Inventis China Growth Fund VI was launched last year and is targeting $3 billion. LPs in the fund are mostly institutional investors from the US and Japan who have re-upped, according to Private Equity International’s source.

We've been able to find companies with owners who have an eye on retirement. They are often willing to sell their shares to a strategic and are allowed to retain a small stake. The exit is always worked out before the investment and the key is due diligence

Kwek Ping Yong, CEO, Inventis

The previous vehicle, Fund V, raised $3 billion and is 80 percent invested.

The firm’s chief executive officer and co-founder Kwek Ping Yong was contacted by PEI but he declined to comment on fundraising.

However, he said that sourcing deals in the central and western parts of China has proven to be a successful strategy.  

“We typically don’t face competition for deals [in the hinterlands] and the valuations are much lower than if we were doing a similar deal in Shanghai, for example.”

The firm, which was founded in 2001, has never exited via IPO, he added. Exits have been sales to foreign and domestic corporations or through secondaries.

“We've been able to find companies with owners who have an eye on retirement. They are often willing to sell their shares to a strategic and are allowed to retain a small stake. The exit is always worked out before the investment and the key is due diligence,” explained Yong, who recently authored a book on due diligence in China.

Inventis also manages an RMB 4 billion (€489 million; $650 million) vehicle and is raising a second one targeting the same amount. Yong’s strategy, which he discussed with PEI in a past interview, is to invest the RMB fund offshore to avoid any fund management conflict with the US dollar vehicles, which are invested strictly in China. 

The RMB fund will invest in natural resources and the energy sector in Africa, Indonesia and other places, all except China, in deal sizes under $100 million, Yong said. 

The strategy hasn’t been tested yet as the firm builds its global pipeline and works with the Chinese government to ensure approval of any deals.

Shanghai-based Inventis is a private equity firm founded in 2001 by Kwek Ping Yong, a Singaporean academic and senior fellow of the Wharton School, and two Japanese partners. It invests in China and has a sector agnostic, growth capital strategy.