Zero2IPO sets up RMB5bn FoF

The investment arm of Zero2IPO Group has launched a FoF targeting RMB5bn. A final close is expected in two years.

China-focused Zero2IPO Group has launched an RMB-denominated fund of funds with a target of RMB5 billion (€526.7 million; $767.5 million), a spokeswoman for the firm confirmed to PE Asia.

According to the spokeswoman, the fund of funds expects to raise RMB2 billion for a first close by the end of the year, with a final close in two years. Limited partners will primarily be financial institutions and high net worth individuals.

While the vehicle will invest in “good quality” GPs with track records, it would also consider first-time funds, the spokeswoman added.

Up till now, most funds of funds investing in China have been pan-Asian and raised in foreign currency by a mix of global and regional players. On the RMB front, most FoF vehicles are run by local governments with more policy-driven agendas.

Two exceptions are Suzhou Ventures Group, which partnered with China Development Bank (CDB) in launching a RMB60 billion FoF in December last year, and EMAlternatives, which launched its RMB vehicle last November to invest in Chinese venture capital and growth capital funds.

The FoF launched by Suzhou Ventures Group and CDB is looking to collect RMB60 billion across four stages over the next five years. The first stage of the fund, which has a target of RMB15 billion, is expected to receive commitments from China’s Social Security Fund and insurance giant China Life.

EMAlternatives’ fund of funds, which is managed under YiMei Capital Management, has been awarded an initial RMB500 million by the MinHang district of Shanghai Municipal Government.

While the country has seen a growing number of GPs, Judy Qing Ye, head of EMAlternatives’ Shanghai office, told PE Asia last year that the steady growth of the local LP base also gave her confidence that the firm was acting at the right time.

“The LP base in China has a great potential because there is so much money sitting in the market. Currently the LP base is totally underrepresented in the overall capital market structure,” Ye said.

Headquartered in Beijing, Zero2IPO has managed two USD funds and one RMB fund with an AuM of RMB1.5 billion under Zero2IPO Ventures.