Global private equity firm Warburg Pincus is looking to raise up to $4.25 billion for a China-Southeast Asia-focused private equity fund, less than three years after it secured $2 billion for its first China fund, according to its latest US SEC filing.
This will be the PE firm’s first vehicle with a dedicated focus on Southeast Asia, a market it has been actively investing in for some time. Warburg Pincus entered Asia in 1994, and has since invested over $17 billion in more than 170 companies in China, India and Southeast Asia.
The new China-SEA fund – Warburg Pincus China-Southeast Asia II LP – will invest alongside the firm’s global PE fund – Global Growth Fund – which is raising as much as $13.75 billion. Both funds will contribute equally to Warburg Pincus’s future investments in China, according to sources interviewed by Reuters in November.
The 2016-vintage Warburg Pincus China LP, the PE firm’s first China-focused fund, is now approximately 75 per cent deployed. The China fund invested $1.5 billion in 25 China and Southeast Asia startups, with its portfolio generating a gross internal rate of return (IRR) of 40 per cent and a 1.33x gross multiple on invested capital (MOIC).
Warburg Pincus has invested in 165 Asia‐based companies, generating a 1.9x gross MOIC and a 16.4 per cent gross IRR. More than 80 per cent of China and Southeast Asia investments made since Warburg Pincus IX Fund were startups or sourced through the Warburg Pincus network.
New York-based Warburg Pincus invests across geographies and sectors at all stages of a company’s life-cycle from its diversified global private equity funds. The firm established its first institutional fund in 1971 and over the last four decades has raised private equity funds with committed capital totalling more than $74 billion.
The PE firm focuses on five key sectors – energy, financial service, healthcare and consumer, industrial and business services, as well as technology, media and telecommunications.
It last raised $2.5 billion in November 2018 for its second energy-focused private equity fund, four years after raising $4 billion for such fund. The firm also secured $2.3 billion for a financial services fund on December 2017 and then the first China-focused fund on December 2016 with $2 billion in commitments.
Warburg Pincus raised $12 billion for its twelfth global fund – Warburg Pincus XII, in November 2015, after launching the fund in May 2015. The LPs of the fund include public and private pension funds, sovereign wealth funds, insurance companies, endowments, foundation, and high-net-worth individuals.
Warburg Pincus China-Southeast Asia II LP will add to a massive industry-wide pool of money for Asian acquisitions and investments, notably in China, which has a bigger pool of fast-growing technology firms compared to other major markets.
In China, the firm recently led the $140-million Series D funding round in Gaosi Education Group, a Chinese educational training institution that provides services for middle and primary schools. It also backed the angel round in AI Xintou, an artificial intelligence industry development platform based in Beijing. Founded in 1966, Warburg Pincus was an early player in the Chinese market, with its first investment being made in 1994.
For Southeast Asia, the firm started investing in the region in 2013, with Vietnam as its maiden market. Since then, it has invested in several companies including Vincom Retail, Lodgis Hospitality, ARA Asset Management, GOJEK, NWP Retail, OnlinePajak, and Trax.
In March, the PE firm was reported to have expressed interest in acquiring Vietnam-based resort The Grand Ho Tram, which comprises hotels, villas, a golf course, and casino. Warburg Pincus has not commented on the report.
The firm also tied up with Korean Teachers’ Credit Union and the CITIC Securities One-Belt-One-Road Fund in March in injecting $200 million in NWP Retail, an Indonesian real estate platform founded in 2015 by Warburg Pincus and PT City Retail Developments.
It made its first investment in Indonesia in 2015, investing $125 million to build and develop hypermarket anchored retail malls in Indonesia in a joint venture with local operator Nirvana Development. Since then, it has made several other investments in Indonesian companies, most notably becoming one of the backers of the country’s ride-hailing giant GOJEK.