This year’s ranking of the largest private equity firms in Asia-Pacific reveals two newcomers in the top five, underscoring the region’s changing dynamics and growth. PE Asia takes a closer look at the top five GPs on the fundraising charts

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This year’s PE Asia 30 rank: 1
Last year’s rank: 6
Capital raised: $6.1bn
Headquarters: Beijing

Beijing-based heavyweight Hony Capital tops the PE Asia 30 rank after advancing up the ranks for two consecutive years.

Despite the weakening fundraising environment last year, Hony Capital’s fundraising efforts were not impacted. In fact, of the five largest funds closed in Asia last year, Hony can be credited for two of them: its fifth US dollar-denominated fund closed on $2.4 billion and a second RMB fund closed on the equivalent of $1.58 billion.

These two funds are distinguished for a couple reasons and they underline the firm’s efforts at pioneering private equity in China. The US dollar fund (nearly double the size of its predecessor) was the largest fund ever raised by a China-based private equity firm.

The RMB fund, which raised RMB 10 billion (€ 1.2 billion; $1.5 billion), attracted commitments from some of China’s largest and most sophisticated institutional investors including the National Social Security Fund and the very first commitment from insurance company China Life.

As one of China’s biggest home-grown private equity firms with over $6.9 billion asset under management, Hony is now looking abroad and has a cross-border strategy for Fund V. Founder and chief executive John Zhao told PE Asia that the strategy involves outbound investment that helps its Chinese portfolio companies to extend their presence overseas, and inbound cross-border in which his firm helps foreign companies expand in China.

Last year, Hony marked yet another first. The firm made the one and only investment to date through Shanghai’s Qualified Foreign LP (QFLP) programme, which essentially allows RMB transactions via a USD fund.

This year’s PE Asia 30 rank: 2
Last year’s rank: 5
Capital raised: $5.8bn
Headquarters: Hong Kong

Another China-based private equity giant, CDH Investments, climbed to second place from the fifth position last year. Its $5.8 billion total for the past five years exceeded last year’s $4.4 billion total. Last year CDH launched fundraising for a second RMB fund, reportedly with a target of RMB 10 billion (€ 1.2 billion; $1.5 billion) and an expectation to reach a final close in the first half of this year. Its first RMB fund raised half that amount in 2008.

On the deal front, so far this year the firm has made a HK$250 million investment in Hong Kong-listed Tse Sui Luen Jewellery. But people are still talking about some of CDH’s headline transactions from 2011, notably the $1.3 billion deal it agreed alongside ICBC’s Tianjin Rongrui Investment fund for a minority stake in a unit of Midea Group, the home appliances maker. Last year, CDH also agreed to take the Singaporean cleantech firm Sinomem Technology private. The company was valued as S$351 million (€198.5 million; $277.5 million) at time of the transaction and CDH was expected to hold no less than a 90 percent stake.

Established in 2002, CDH has platforms and funds dedicated to private equity, venture capital and real estate investments.

This year’s PE Asia 30 rank: 3
Last year’s rank: 2
Capital raised: $4bn
Headquarters: Sydney

Still among the top three is Australia-based Pacific Equity Partners, which slipped one spot this year into third place in the PE Asia 30.

During the five-year window measured, PEP raised $4 billion – that’s down from the $5.4 billion that counted towards its total 2011. The last large close for PEP was the A$4 billion (€3.17 billion; $4.1 billion) fund it raised in 2008.

A fundraise could soon be in the cards, though, as PEP spent 2011 actively exiting many investments. In August, the firm alongside Unitas Capital sold its stake in New Zealand business Independent Liquor for NZ$1.53 billion. The firm originally paid NZ$1.2 billion for the company. Other recent exits included snack maker Griffin’s Foods, Tegel Foods and Collins Foods.

This year’s PE Asia 30 rank: 4
Last year’s rank: 4
Capital raised: $3.97bn
Headquarters: Hong Kong

Same spot, less capital. Baring Private Equity Asia has managed to retain its fourth place spot thanks to the $2.46 billion fund it closed last year. Baring Asia Private Equity Fund V was the largest raised throughout 2011. However, the firm has cumulatively raised less capital during this PE Asia 30’s five-year period than the previous five-year window, when capital it had raised totalled $4.5 billion.

Baring had an active year expanding into new sectors, such as education, and exiting its investments. In July, the firm sold its 16.5 percent holding in China-based confectionery group, Hsu Fu Chi International, to Nestlé in a blockbuster deal worth $1.7 billion.

During 2011, Baring also expressed its intention to expand its real estate operations, as revealed by sister publication PERE in June when the firm appointed former RREEF and AIG senior executive Mark Fogle as its first dedicated real estate professional.

Jean Eric Salata, founder and chief executive officer of Baring Asia, commented: “We believe there will be many interesting investment opportunities in the sector as we go through this next cycle.”

This year’s PE Asia 30 rank: 5
Last year’s rank: N/A
Capital raised: $3.69bn
Headquarters: Shanghai

Making its debut on the PE Asia 30 stage, Shanghai International has flown straight to the top.
Closing an RMB 7 billion (€855.3 million; $1.1 billion) dual-currency fund in January 2012 pushed it to fifth in the rankings.

The fund, which will focus on investments in the environmental protection, information technology and high-end manufacturing sectors among others, scored commitments from state-owned enterprises, listed companies and US and European institutions.

Shanghai International’s portfolio includes online games platform, Haofang Group, hypermarket chain RT-Mart and Canadian-listed Sino-Wood Partners, a subsidiary of Sino-Forest Corporation.

Shanghai International was started by the Shanghai city government in 2000 and has since raised $3.6 billion through various vehicles. In June 2010, the group raised RMB11 billion for its Shanghai Financial Industry Investment Fund, marking the largest RMB-denominated fund raised at the time.

In February, the government also launched a RMB 50 billion fund in Shanghai to assist companies with overseas acquisitions. The fund will be run by Shanghai International-owned Sailing Capital International and is the government’s latest commitment to making cross-border investments.