US pension fund Washington State Investment Board (WSIB) has disclosed a commitment of up to $300 million to Warburg Pincus‘s China-Southeast Asia-focused private equity fund, which closed in June at over $4.25 billion.
The vehicle – Warburg Pincus China-SEA II – is Warburg Pincus’s first fund with a dedicated focus on Southeast Asia. It 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.
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).
In its investment advisory dated June 20, 2019, the $132.3-billion WSIB said it was moving forward with the investment in Warburg Pincus China-Southeast Asia II as part of its private markets investment program.
WSIB said it has had a 24-year partnership with Warburg Pincus, investing in 12 previous funds since 1994.
Aside from the WSIB, the New Jersey Division of Investment, which manages investments for the $76.51-billion state pension fund, had also revealed a commitment of up to $100 million to the China-Southeast Asia focused fund.
The Minnesota State Board of Investment (SBI) also committed $50 million to the fund.
Eyeing real estate opportunities in Asia
WSIB, which invests across 34 funds, has total assets under management of $132.3 billion as of September 30, 2018. Of this, about $17.2 billion is invested in real estate.
However, the pension fund’s real estate exposure in Asia is limited, making up only 4.2 per cent of the total, according to its latest quarterly investment reports.
In February, WSIB proposed the creation of a Hong Kong-based real estate investment manager that would initially focus on real estate markets in Asia.
According to the proposal, the $132.3-billion WSIB will commit $250 million to Crane Capital, the new Hong Kong-based real estate investment manager.