November 23, 2018 / 4:15 AM / 21 days ago

Chinese PE firm Boyu Capital raising at least $3 billion new fund - sources

HONG KONG (Reuters) - Chinese private equity firm Boyu Capital is raising a new U.S. dollar-denominated fund of at least $3 billion (2.3 billion pounds) in committed capital, people with direct knowledge told Reuters.

FILE PHOTO: The logo of Boyu Capital is seen at the company's office in Hong Kong, China December 11, 2013. REUTERS/Tyrone Siu/File Photo

The fund, which is Boyu’s fourth and would be its largest to date, is expected to close in the coming months, the sources said, declining to be named as the information is confidential.

The fund size however has not been finalised and could be up to $4 billion, two of the sources added.

Boyu Capital declined to comment.

Hong Kong-based Boyu joins a slew of global and regional investment firms that have raised record-sized funds for a region seeing a surge in deal-making.

As of mid-November, Asia-focused PE managers raised a combined $49 billion in dollar-denominated funds for the region, up from $37.8 billion over the same period last year, according to data provider Preqin.

Hong Kong-based investment firm PAG on Monday said it has closed its third Asia-focused buyout fund at $6 billion. Hillhouse Capital closed its latest fund at $10.6 billion in September. That exceeded the $9.3 billion of private equity firm KKR & Co Inc’s (KKR.N) Asia-focused buyout fund closed in June 2017 to become the largest in Asia.

Founded in 2010, Boyu counts former TPG Capital senior executive Mary Ma and Alvin Jiang, also known by his Chinese name Jiang Zhicheng, the grandson of former Chinese president Jiang Zemin, as partners.

It is known for a 2012 investment in e-commerce giant Alibaba Group Holding Ltd (BABA.N), and cutting other lucrative deals in China, such as its 2011 purchase of a controlling stake in Sunrise Duty Free, a retailer with outlets at Beijing and Shanghai airports, and the 2015 privatisation of then New York-listed WuXi PharmaTech, China’s largest contract medical researcher.

In the past few years, Boyu has also been actively investing in China’s booming tech start-ups, including ride-hailing champion Didi Chuxing, on-demand services provider Meituan Dianping (3690.HK), and Alibaba’s financial affiliate Ant Financial, according to separate people with knowledge of the matter.

Boyu’s last U.S. dollar PE fund, which raised about $2.1 billion in 2016, saw a 37.5 percent gross internal rate of return (IRR) as of the end of June, according to one of the sources.

Its first two dollar PE funds which raised about $1 billion and $1.6 billion and were fully invested, had net IRRs - which deducts management fees, fund expenses and carried interest of about 35 percent and 40 percent, respectively, said the source.

Boyu's big name Asian backers include Singapore state investor Temasek Holdings and Li Ka-shing, Hong Kong's richest man, Reuters has previously reported. [reut.rs/2PNHv4E] [reut.rs/2DSfqTn]

Reporting by Kane Wu and Julie Zhu; Editing by Stephen Coates

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