China’s CDH Investments makes first close of mezzanine fund at $484m

Beijing-headquartered private equity firm CDH Investments has announced the first close of its RMB-denominated fifth mezzanine fund at $484 million (RMB3.2 billion), according to a China Money Network report.

The first close was made after seven months of the fund’s launch. The mezzanine fund is targetting to raise twice as much as the fourth fund that raised $529 million, Ning Hu, a managing director at CDH Investments, was quoted as saying in the report.

Among investors for the fund were insurance companies, banks, trust companies and other institutional investors.

Established in 2002, CDH Private Equity manages five USD-denominated funds and two RMB-denominated funds, with cumulative assets under management in excess of $10.5 billion.

Talking to the local media, Hu added that the speed of fundraising is accelerating, indicating increased recognition of CDH’s mezzanine funds by limited partners.

“When we raised our third fund, we still needed to spend a lot of energy to introduce to limited partners what mezzanine funds do. But with the current fifth fund, it’s much easier as investors understand this strategy much better now,” Hu told reporters.

Mezzanine investments are starting to become more mainstream in China. In 2014, the Chinese State Council announced policies for the insurance sector, where mezzanine investments were parked under insurance investments. The move boosted growth in these vehicles as more insurers started setting up their own mezzanine funds.

CDH Investments was recently reported to be on the road to raise up to $2 billion for its next flagship buyout fund targeted at investments in China.

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