Chinese venture capital firm Xiang He Capital has closed its second USD‐denominated fund at the increased hard cap of $425 million, the firm announced on Tuesday.
The oversubscribed fundraising exceeded Xiang He Capital’s initial target of $350 million, with support from both existing and new investors that include global consultants, university endowments, foundations, family offices, pensions and fund‐of‐funds from the US, Europe, the Middle East, and Asia‐Pacific.
In July, DealStreetAsia reported that the Beijing-headquartered fund manager secured a first close for the second fund, which already surpassed the corpus target.
Xiang He Fund II, launched in June 2018, inherits the Fund I strategy to invest in “high‐growth internet and tech‐enabled businesses in China, identifying and investing at an inflection point where companies have operational traction but have not yet scaled to the growth stage of investment,” Xiang He Capital said.
The second vehicle has made four investments in e‐commerce, online education, enterprise services, and artificial intelligence. The most recent deal was a Series B funding worth $14.5 million in GuanData, a Chinese provider of next-generation data analytics and business intelligence solutions to new retail and new finance customers.
“We have been able to source some interesting early investments in the fund and believe the coming cycle offers exciting opportunities for China’s TMT market and a more normalised valuation environment for this vintage,” said Hesong Tang, founding partner, Xiang He Capital.
Tang and Maggie Yang, his co-founding partner, were former Baidu investment executives before establishing the venture capital firm in 2016. They were responsible for major acquisitions at Baidu, such as investments in iQiyi, Qunar, PPS and 91 wireless.
Xiang He Capital has also backed logistics companies Lalamove and Yunmanman, AI-enabled healthcare startup Synyi, Sensors Data, and education platform VIPKid, among others.
With a focus on internet, enterprise services, AI and big data in China, Xiang He Capital manages two USD funds and one yuan fund with over $1 billion under management.
Despite lingering effects of the trade war, the good news for investors in the TMT sector in China is that the country is likely to further relax restrictions on foreign investment, according to law firm Hogan Lovells. Recently, CITIC Capital Partners closed its latest China buyout fund with a focus on TMT at $2.8 billion.