Chinese private equity heavyweight Hopu Investment Management is winding down, according to various media reports.
The firm has told its LPs that it will not raise a second fund and that two of its three co-founders plan to retire once the firm’s existing investments have been exited, according to a report in the Financial Times.
“We received a letter from Hopu, saying that they will continue to take care of the [existing] fund,” one Hong Kong-based LP was quoted as saying in the report.
Hopu declined to comment when contacted.
According to media reports, the two founding partners planning retirement are Richard Ong and Dominic Ho. It is not known what Fang Fenglei, the third and most famous co-founder, plans to do once Hopu winds down.
Hopu, which was founded in 2007 with the backing of Singaporean sovereign wealth fund Temasek and Goldman Sachs, raised a staggering $2.5 billion for its debut fund. Prior to establishing Hopu, Fang was head of Beijing-based Goldman Sachs Gao Hua Securities, Ong was Goldman Sachs's co-head of investment banking in China and Ho was a partner at KPMG.
The firm wasted no time in making a splash on the investment side, its maiden deal being a $300 million co-investment alongside Temasek in Hong Kong Lung Ming Investment Holding, the operating company of a Mongolian ore mine.
Resources remained a favourite play for the media-shy firm, which was linked with a prospective investment in a railway construction project in Sumatra alongside Indonesian state-owned coal mining company Tambang Batubara Bukit Asam in April this year. Continuing with the resources theme, in May this year, Hopu joined Temasek in a $1 billion deal to invest in New York Stock Exchange-listed oil and gas developer Chesapeake Energy Corporation.
PIPEs were also a favoured investment strategy for Hopu, with examples including the $700 million acquisition of shares in Bank of China from Royal Bank of Scotland in January 2009; and the purchase of a 6 percent stake, or 13.5 billion shares, in China Construction Bank for $7.3 billion from Bank of America later that year in May.
In addition, Hopu and Chinese state-owned enterprise COFCO reportedly invested around $800 million in China Mengniu Dairy Company for a combined 20 percent holding in July last year. Five months later, the firm reportedly bought $430 million worth of new shares in Chinese insurer China Pacific Group, a portfolio company of The Carlyle Group.
Most recently, in July this year, the Chinese media reported that Hopu is set to raise an RMB-denominated fund targeting at least RMB3 billion. The fund, which was reportedly to be set up in Beijing, would focus on investments in the retail sector.