US pension fund San Francisco Employees’ Retirement System (SFERS) has approved a $25-million investment in the healthcare vehicle managed by Asia-focused private equity major Hillhouse Capital Group.
SFERS said the investment, approved unanimously by its Retirement Board, is classified as a venture capital investment within its private equity portfolio. About $15 million of the total investment closed on July 7, 2021.
Hillhouse Capital, founded by Chinese investor Zhang Lei in 2005, mainly focuses on Asia, covering healthcare, consumption, and corporate services sectors.
The big-name Chinese companies it has backed include Tencent Holdings, JD.Com, Alibaba Group Holding, Meituan, Didi Chuxing Technology, and Pinduoduo.
The firm was reported to be seeking to raise an aggregate of $12 billion for its buyout and growth vehicles and is following a separate fundraising strategy for both.
Chinese local media earlier reported that Hillhouse Capital started the USD-denominated vehicle’s fundraising in April 2020 targeting to raise $13 billion, with the buyout fund allocation at nearly $10 million.
The PE major closed the predecessor vehicle, USD-denominated Hillhouse Fund IV, at $10.6 billion in 2018 targeting investments across healthcare, consumer, technology, and services sectors globally, with a focus on Asia.
In February 2020, the firm launched a VC arm, GL Ventures, to raise its stakes in early-stage investments. Hillhouse and GL Ventures participated in at least 12 investments worth about $1.1 billion in March 2020, according to proprietary data compiled by DealStreetAsia.
It also partnered with New York-listed Chinese software firm Tuya Inc in April this year to set up a $400-million fund for investments in the global Internet of Things (IoT) industry.
Tuya, which provides an IoT cloud platform for smart devices, is expanding its investments in the IoT sector a month after it raised $915 million in an initial public offering (IPO) on the New York Stock Exchange (NYSE).
Meanwhile, SFERS disclosed that its portfolio edged out a gain of 0.42% in July 2021. Private credit returned 1.82% while Private equity, fixed income, and public equity were up modestly with returns of 0.65%, 0.49%, and 0.36%, respectively.