CDH Investments is heading for a timely closure of its 5th funds with USD 2 Billion

One of the largest homegrown Chinese private equity firms, CDH Investments, is now only a few months away from closing the fundraising for the company’s whopping 2 billion US Dollar fifth fund. While the deal-making industry is struggling to exit investments via initial offerings from the public, the success of the deal comes at exactly the right time.
CDH Investments was founded in 2002. It’s a spin-off unit, managing about $8 billion US Dollars in assets, of the investment bank CICC that is based in Bejing.

The main goal of the firm is to freshly raise proceeds from the latest fund for investments in “growth, buyout and consolidation opportunities in health care, consumer and financial services”. This information was gathered from people with direct knowledge of the matter, who asked to remain anonymous because the fund is still in the process of going through the market. They continued by saying that, besides raising funds from existing shareholders, a lot of the new capital comes from an influx of Asia and United States-based institutional shareholders who are more than willing to take a lock-up period of a decade, reflecting their commitment to China’s growth story.
The door to cashing out in China’s listing market is still quite short and because of this, only a few international and well-connected funds, including KKR and the Lenovo-backed Hony Capital, can gather enough money in order to exploit the opportunities that are available to them. Valuations of publicly listed companies are trading much lower than other emerging markets such as India and Indonesia.

The mainland Chinese IPO market, including the Shanghai and Shenzhen stock exchanges, has been the single most important exit for private equity investments in China for the past 10 years, as well as for some large state-owned enterprises seeking fresh money.

Ching Tan, who is the managing partner of the CDB Kaiyuan Fund, the private-equity arm of China Development Bank, said that there was a direct correlation between robustness in China’s exit conditions for funds and the fund-raising landscape, which view as a signal of market peaks and troughs by private equity firms.
The difficult exit situation means that equity companies found it somewhat difficult to raise fresh capital, even though emerging signs authorities will lift the ban on domestic listings
Public speculation that recently suggested that the domestic IPO market, which has been effectively shut since last November, could even potentially restart before October 1 after the securities regulator completes a detailed plan on reforming the stock offering process, were spot on.
Tan also said that nimble, low-profile funds tend to outperform peers, probably because they can stay away from the spotlight and quietly make deals.