US pension fund San Francisco Employees’ Retirement System (SFERS) has approved a total of $125 million to funds managed by Hong Kong-based private equity firm Asia Alternatives Management and Asia-focused PE major Hillhouse Capital Group.
The latest monthly report released by SFERS disclosed that its board had approved an investment of up to $50 million to Asia Alternatives Capital Partners VI. The investment, classified as a growth fund within SFERS’ PE portfolio, is the pension fund’s third investment with Asia Alternatives.
It also approved an investment of up to $75 million in aggregate in Hillhouse Fund V and Hillhouse Focused Growth Fund. The investment is classified as venture capital – late-stage fund and is SFERS’ third investment with Hillhouse Capital.
Asia Alternatives, one of the largest independent Asian private equity fund-of-funds, focuses on Greater China, East Asia, Southeast Asia, and Australia. It has offices in Hong Kong, Beijing, Shanghai, and San Francisco and reports over $11 billion in assets under management.
In 2017, the firm raised $1.5 billion for Asia Alternatives Capital Partners V, which had bagged a $99 million commitment from the Minnesota SBI.
Hillhouse, on the other hand, was founded in 2005 by Chinese rainmaker Zhang Lei with seed funding from a Yale University endowment. The Asia-focused PE firm made early investments in Chinese tech giants Tencent Holdings Ltd, JD.com Inc and Baidu Inc.
A Reuters report last month said Hillhouse is raising a fund targeting over 20 billion yuan ($3 billion) as it readies itself for opportunities offered by the eventual normalisation of the Chinese economy. Hillhouse reportedly formally began fundraising for its largest-ever yuan fund in recent months.
The approved investments in Asia Partners and Hillhouse Capital were part of the $275-million in total approved investments that SFERS disclosed during its meeting last month.
It also approved a $50-million commitment in Blue Torch Credit Opportunities Fund II, $25 million in Lead Edge Capital V, and $75 million in OrbiMed Private Investments VIII.
The US pension fund disclosed though that its investments in September lost -0.77 per cent. However, its PE and private credit books posted positive returns during the month, up 1.29 per cent and 0.95 per cent, respectively.
“Our public equity book lost -2.92 per cent during the month, driven by profit-taking after the extraordinary run-up since late March, an uptick in new COVID-19 cases, and uncertainty about the future of taxation and regulation as the 2020 election season nears,” SFERS said.
For the quarter ended September 30, SFERS investments gained 6.23 per cent, with PE and public equity posting sterling returns of 12.26 per cent and 9.46 per cent, respectively.
Last month, SFERS disclosed a $25-million investment in Hong Kong-based alternative investment firm PAG, which seeks to raise at least $1 billion to make realty investments in markets including Australia, New Zealand, China, Japan, Southeast Asia, and South Korea.