FountainVest Partners said on Thursday it had gathered $2.1 billion to back the winners in industry consolidation across China.
Led by Frank Tang, a former Goldman Sachs banker and head of China investments at Temasek, FountainVest managed to swiftly win commitments from its existing and some new investors who bought into his plan for making money during the downturn.
“We believe that industry consolidations will intensify, mergers and acquisitions will create national leaders,” said Tang in a statement which focuses on the media, healthcare and consumer sectors.
The very swift capital drive happened against a tougher environment for Chinese private equity this year as the economy slows and stock market regulators force companies to wait in a long queue before listing.
China-based funds have secured $12 billion so far this year, well down on the $32 billion and $34 billion raised in 2014 and 2015 respectively, according to data provider Preqin.
Investors in private equity, known as limited partners (LPs), are screening funds’ track records and team stability in the tougher environment.
FountainVest’s founders have worked together since the mid-1990s through multiple economic cycles.
Fund III was oversubscribed due to existing investors returning in force as well the entry of a number of new institutional investors.
Early investors in FountainVest’s funds included: Canada Pension Plan Investment Board, Ontario Teachers' Pension Plan, and Temasek Holdings.
The firm was founded and managed by a team of four partners: Tang, Terry Hu, George Chuang and Chenning Zhao. The four have all worked for Singapore-based state investment firm Temasek at one point in time. Tang headed China investment at Temasek. Before he joined Temasek, he spent 11 years at Goldman Sach.
Founded in 2007, FountainVest backed advertising firm Focus Media, the first Chinese company to de-list in the US and relist in the A-share market.
It also bought a 10% stake in IMAX for $40 million. It sold shares during the firm’s $285 million Hong Kong IPO in September last year.
It continues to co-invest with CPPIB. Together they sold stakes in US firm Key Safety Systems in February.
The size of FountainVest China Capital Partners Fund III is a big jump from its second fund at $1.35 billion.
Pension plans, sovereign wealth funds, insurance companies and other institutions from North America, Europe, Australia, Middle East and Asia continue to represent the primary investor base of FountainVest.
