Speed of fundraising highlights demand for Chinese investments

SHANGHAI / HONG KONG - Hony Capital, one of China's most successful private equity funds, has raised nearly $4 billion from investors, a source familiar with the matter told Reuters on Thursday, defying the increasingly tight fundraising climate.

The source said Hony had almost doubled the size of its previous dollar and yuan funds, raising $2.4 billion for its fifth dollar-denominated fund, and 10 billion yuan ($1.6 billion) for its second local currency fund, the source said.

Hony Capital, backed by Legend Holdings Ltd, declined to comment. The source declined to be identified as the matter was not public.

The speed of Hony's fundraising - which began in September for the dollar fund with a target of $2 billion, the source said - underlines the appetite of international investors for investments in China through funds like Hony, which have an established track record.

Private equity companies around the world have found it tougher to raise money since the global economic downturn in 2008, although the Asia-Pacific region has seen its share of global fundraising rise to 22 percent from just 9 percent in 2008, the research and consultancy company Preqin said in a recent report.

Europe accounted for 23 percent of fundraising, according to Preqin.

A small portion of the Hony fund may be used for overseas investment, the source said. After years of focusing on their home turf, Hony and other China funds are expanding abroad, slowly but steadily moving across Asia and into parts of the Western market.

Hony Chief Executive Officer John Zhao previously told Reuters that technology companies in the United States, Europe and Japan could improve their value significantly if they could get their products into China.

The private equity company has previously raised more than $2 billion in four dollar-denominated funds from investors including Goldman Sachs Group Inc, Temasek Holdings Pte Ltd and Stanford University since 2003.

Hony's first yuan-denominated fund raised 5.2 billion yuan in 2008, according to the company's website. The new fund's investors include China's National Social Security Fund.

Reuters