Warburg Pincus closes China-Southeast Asia PE fund at over $4.25b

A Benjamin Franklin U.S. 100-dollar banknote and a Chinese 100-yuan banknote depicting the late Chinese Chairman Mao Zedong, are seen in a picture illustration in Beijing

Global private equity firm Warburg Pincus has made the final close for its China-Southeast Asia-focused private equity fund – Warburg Pincus China-SEA II – after securing commitments exceeding a $4.25-billion hard cap.

The vehicle, which is Warburg Pincus’ first fund with a dedicated focus on Southeast Asia, was launched in January this year with a target fund size of $3.5 billion.

Warburg Pincus China-SEA II will invest in Chinese and Southeast Asian portfolio companies alongside the firm’s global PE fund, Warburg Pincus Global Growth Fund LP (WPGG), which closed in late 2018 at $14.8 billion.

“The combination of the capital committed to Warburg Pincus China-SEA II, and the capital from WPGG to be invested in the region, gives Warburg Pincus one of the largest dedicated pools of capital in the private equity industry for China and Southeast Asian opportunities,” the PE firm said in a statement.

The China-SEA-focused private equity fund attracted existing investors in Warburg Pincus’ current funds as well as new investors. According to the firm, the investors include public and private pension funds, sovereign wealth funds, insurance firms, endowments, foundations, fund of funds, family offices, and high net-worth individuals.

DEALSTREETASIA reported in March that the New Jersey Division of Investment, which manages investments for the $76.51-billion state pension fund, proposed an investment of up to $100 million in the PE fund. The Minnesota State Board of Investment (SBI) has also committed $50 million to the fund.

Warburg Pincus China-SEA II is the successor fund to the 2016-vintage Warburg Pincus China LP, the PE firm’s first China-focused fund, which 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’ select current investments in China and Southeast Asia include Amcare, ANE Logistics, Ant Financial, ARA, China Kidswant, D&J China, ESR Group, Go-Jek, Hygeia, Jinxin Fertility, Liepin, Mofang, NIO, Vincom Retail, Yuanfudao, and ZTO Express.

The new fund will focus on investing across five sectors – consumer and services, healthcare, real estate, financial services, and technology, media, and telecommunications (TMT).

“The strong demand for Warburg Pincus China-Southeast Asia II reflects our established track record, our talented investment team, and the opportunities our Limited Partners see for growth investing in China and Southeast Asia,” said Warburg Pincus co-chief executive officers Charles R. Kaye and Joseph P. Landy.

So far, the firm has invested more than $11 billion into more than 120 companies in China and Southeast Asia, according to the co-CEOs.

“In recent years, from our Singapore base, Warburg Pincus has become one of the largest and most active investors in Southeast Asia, with a particular emphasis on Vietnam, Indonesia and Singapore. Southeast Asia is a large and growing market for us, exhibiting many of the strong investment themes and trends which have driven our China business over the last 25 years,” said Jeff Perlman, Managing Director and Head of Southeast Asia, Warburg Pincus.

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.