China’s Centurium Capital raises over $2b for debut fund from GIC, Temasek, others

A worker pulls a cart under the Liede Bridge over the Pearl River in Guangzhou, China, on Wednesday, Nov. 1, 2017. Photographer: Qilai Shen/Bloomberg

China’s Centurium Capital, a big backer of domestic startup Luckin Coffee, said it has raised more than $2 billion in its debut fund, giving the private equity firm more firepower to cut deals involving the world’s second-largest economy.

The firm, co-founded by the former head of Warburg Pincus Asia Pacific, David Li, said in a statement on Wednesday that Centurium Capital Partners 2018 L.P. raised the sum in U.S. dollars.

The fund secured strong interest from global investors, known as limited partners (LPs), such as pension funds, sovereign wealth funds and funds-of-funds, it said.

Investors in the fund include Singapore’s GIC Pte Ltd and Temasek Holdings, Canada’s Ontario Teachers’ Pension Plan, China Investment Corp (CIC) and U.S. pension fund Washington State Investment Board, said two people with direct knowledge of the matter.

Centurium declined to comment on the fund’s LPs. All the investors didn’t immediately respond to requests for comment.

The U.S. dollar fund will help Centurium invest in Chinese firms that use overseas structures such as variable-interest entities.

Centurium joins several China-focused private equity and venture capital managers who raised $17.3 billion in dollar-denominated funds in the first half of the year, versus $13 billion over the same period last year, according to data provider Preqin.

Launched in March 2018, Centurium’s maiden fund reached the first close of nearly $1 billion three months later and has beaten the $1.5 billion and $1.98 billion fundraising targets since then.

BESPOKE SOLUTIONS

Beijing-based Centurium was set up in early 2017 by Li and two other partners. Li had worked with Warburg Pincus for 14 years and led several investments for the U.S. buyout firm in China, including in top car rental service provider CAR Inc.

“After helping several entrepreneurs fulfill their entrepreneurial dream for so many years, I also have my dream of launching our own (investment) firm,” Li told Reuters.

Centurium primarily seeks control and significant minority investment opportunities across China’s consumer, services and healthcare sectors where it looks to boost operational efficiency and tackle structural deficiencies.

“The Chinese business environment nowadays needs a new generation of investors that combine the global PE best practice and local experience,” Li said.

“Instead of being a pure capital provider, firms like Centurium can better integrate with local markets and be more efficient and responsive to provide bespoke local solutions to new challenges and opportunities faced by Chinese entrepreneurs.”

Centurium began to gain recognition last year when it made a big bet on Luckin Coffee, the Chinese challenger to Starbucks Corp. It invested about $180 million in Luckin in the startup’s first two fundraising rounds.

Li said that Centurium has invested about 40% of the capital raised in the debut fund in five firms in China and aims to fully deploy the fund by the end of next year.

Besides Luckin, Centurium’s portfolio firms include Keking, an online logistics services provider, China Biologic Products, a biopharmaceutical firm which makes and sells plasma products, and online education platform Happy Kids Education.

Reuters