NEW HORIZON CAPITAL, whose co-founders include the son of Chinese Premier Wen Jiabao, will raise a $1bn (£616m) private equity fund.
The fund will be solely focused on investing in domestic industry leaders who are ready to make an IPO, according to sources close to the matter.
This would be the third and largest private equity fund for New Horizon. The company recently completed raising in the region of $700m for its latest fund, with capital commitments from Japan’s Softbank and Singapore state investor Temasek Holdings.
It started pitching the fund as early as 2008, but found it tough going as a result of the financial crisis and suspended the fund until early 2009, the sources said. Softbank, run by influential Japanese tycoon Masayoshi Son, and Temasek were long-time investors since the firm launched its first fund in 2007.
Beijing is becoming more welcoming to foreign private equity funds that are boosting investment in China and creating jobs, which the government sees as key to maintaining social stability. Despite Wen’s background, New Horizon Capital is considered a foreign fund because of its legal structure and the foreign sources of its dollar capital.
New Horizon Capital’s first fund was launched in 2007. Soon afterwards, Wen and his management team, which includes long-time friends from the US, made some quick investments in privately-held Chinese enterprises with potential to be market leaders. Private equity investment in China has a brief history, but New Horizon Capital has had some notable achievements.
It recently bought a large stake in Shenzhen-listed wind power producer Xinjiang Goldwind Science & Technology, a leading wind power equipment maker in China. Goldwind is looking to raise $1.5bn via a Hong Kong listing this year.
Other New Horizon investments, such as Yingli Green Energy and Kingsoft, have already gone public.
City A.M. Reporter