Orchid Asia to hold $900m ‘one and done’ on Fund VII

Details of the Asia-focused fund's strategy and terms were revealed in documents prepared for Pennsylvania Public School Employees' Retirement System.

Orchid Asia Group, a China growth equity-focused firm, is expecting to hold a first and final close for its seventh vehicle by November.

The Hong Kong-headquartered investment firm is seeking $900 million for Orchid Asia VII, according to a document prepared by advisor Hamilton Lane for Pennsylvania Public School Employees’ Retirement System.

Capital from the fund will be invested in about 25 companies with ticket sizes of between $20 million to $150 million. The firm primarily targets Chinese companies in the consumer services and products sector, outsourced manufacturing, retailing, high tech, media and healthcare services sectors.

Orchid itself will commit 5.6 percent of commitments or a minimum of $50 million to Orchid VII, as well as 7 percent or $68 million for co-investments, the document notes.

PSERS’ board approved a commitment of up to $75 million Orchid VII, according to its website. The pension has already backed Orchid Asia’s previous funds, committing $40 million to the 2011-vintage Fund V and $75 million the 2014-vintage Fund VI, a separate document from PSERS shows.

Fund V delivered a 1.7x money multiple and 28.4 percent net internal rate of return, while Fund VI delivered 1.1x multiple and 10.4 percent net IRR as of 30 June, according to the document.

Investors in Orchid Asia’s previous funds include Oregon State Treasury, Maryland State Retirement and Pension System, Alaska Permanent Fund and Commonwealth Superannuation System, according to PEI data.

Orchid Asia manages over $3 billion of assets and has offices in Hong Kong, Shanghai, Beijing and Guangzhou. Its portfolio includes travel company Ctrip, ladies apparel company La Chapelle and personal care products manufacturer Weimeizu.

Orchid Asia declined to comment on fundraising.