China-focused funds raise US$2.5b from investors including GIC and Temasek

State investor Temasek Holdings is one of DCP Capital's investors.
State investor Temasek Holdings is one of DCP Capital's investors.PHOTO: ST FILE

HONG KONG (REUTERS) - DCP Capital, co-founded by former KKR & Co Greater China head David Liu, said it has raised about US$2.5 billion in its debut US dollar and yuan funds, giving the private equity firm adequate firepower to invest in Greater China.

DCP's investors include Singapore sovereign wealth fund GIC and state investor Temasek Holdings, as well as Canadian public pension fund Caisse de depot et placement du Quebec (CDPQ), said a person with direct knowledge of the matter, declining to be identified as the matter was private.

The funds add to a massive pool of money for Chinese investment and underscore investor confidence in the ability to cut deals in the world's second-largest economy in the face of economic slowdown and trade tension with the United States.

China-focused private equity and venture capital managers raised US$37 billion last year in dollar-denominated funds, versus US$40 billion in 2017, according to data provider Preqin. Asia-focused dry powder - money committed but not yet invested - was a record US$291 billion at the end of 2018.

DCP in a statement on Tuesday (April 16) said it raised over US$2 billion for its DCP Capital Partner I dollar fund from investors, known as limited partners. The fund was "significantly" oversubscribed due to strong demand from investors such as pension funds, funds-of-funds and sovereign wealth funds, it said.

Along with a concurrently raised yuan-denominated fund, committed capital reached about US$2.5 billion, putting DCP among several China-focused investment managers that have funds in both US and Chinese currencies.

DCP declined to comment on the identity of the investors.

The Hong Kong and Beijing-based private equity firm said it will primarily seek buyout and significant minority investment opportunities in sectors that benefit from consumption upgrade and industry consolidation in Greater China, such as consumer, industrial technology and healthcare.

DCP was set up in 2017 by Mr Liu who was also a co-head of KKR's Asia private equity business, and Julian Wolhardt, a former senior KKR executive in the region after both worked with the US buyout firm for 11 years. Prior to KKR, Mr Liu and Mr Wolhardt led Morgan Stanley's private equity business in Asia.

Both had led investments for KKR including in raw milk producer China Modern Dairy Holdings Ltd, home appliance maker Haier Electronics Group Co Ltd and leasing firm Far East Horizon Ltd.

DCP has invested about 30 per cent of the capital raised in about seven firms mainly in China, including COFCO Meat, a unit of state-owned grain-to-real estate conglomerate COFCO, domestic medical device firm Venus Medtech, and Singapore-based provider of mobile financial services MFS Technology, said the person.