CDH Investments raises $1bn for its China debt fund V – exclusive

The Beijing-based investment firm’s fifth China-focused mezzanine debt fund, when officially closed, will be more than double the size of its predecessor.

CDH Investments, a Beijing-based private equity firm, has raised $1 billion so far for its fifth mezzanine fund, CDH Mezzanine Fund V, people familiar with the fundraising confirmed to PDI.

The CDH Mezzanine Fund V was officially launched in May 2017, with an initial capital raising target of between 7 billion yuan to 10 billion yuan ($1.6 billion; €1.3 billion), according to a firm’s spokesperson who did not wish to be named.

PDI understands that the yuan-denominated vehicle held the first close at $551.5 million (3.5 billion yuan) last November.

The source further added that the firm expects to close the fund within the first half of this year, and that three other investors are in the process of finalizing their commitments by next month.

The new vehicle will end up being more than double the size of its predecessor CDH Mezzanine Fund IV, which closed on 3.5 billion yuan in August 2016. The fund garnered the capital from ten domestic institutional investors, the spokesperson said.

The LPs include Huatai Insurance, China Life Peking University, Zhejiang University and The People’s Insurance Company of China, as per PDI reporting.

The CDH Mezzanine Fund series has a mandate to invest in the healthcare and consumer sectors.

Representatives from CDH Investments declined to comment further.

CDH Investments is one of the oldest private equity firms focused on China. The firm spun out from the direct investment department of China International Capital Corporation in 2002.

The firm’s credit and mezzanine vehicles manage over $1.3 billion via four RMB-denominated funds as of January 31, 2017, according to its public disclosure.

The credit arm was established in 2011 to provide financing for mergers & acquisitions, high growth private businesses, fixed assets investments and non-performing assets. It has invested in over 40 projects and has realized 21 exits as of January 2017.

Its credit structure includes convertible bonds, preferred debt, subordinated debt, buyback of shares and allocation of equity interests.