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Ex-KKR Asia veterans raise $2.5 billion for first China-focused funds

By Julie Zhu

HONG KONG (Reuters) - DCP Capital, co-founded by former KKR & Co Greater China head David Liu, said it has raised about $2.5 billion (£1.9 billion) in its debut U.S. dollar and yuan funds, giving the private equity firm adequate firepower to invest in Greater China.

The funds add to a massive pool of money for Chinese investment and underscore investor confidence in the ability to cut deals in the world's second-largest economy in the face of economic slowdown and trade tension with the United States.

DCP in a statement on Tuesday said it raised over $2 billion for its DCP Capital Partner I dollar fund from investors, known as limited partners. The fund was "significantly" oversubscribed due to strong demand from investors such as pension funds, funds-of-funds and sovereign wealth funds, it said.

Along with a concurrently raised yuan-denominated fund, committed capital reached about $2.5 billion, putting DCP among several China-focused investment managers that have funds in both U.S. and Chinese currencies.

China-focused private equity and venture capital managers raised $37 billion last year in dollar-denominated funds, versus $40 billion in 2017, according to data provider Preqin. Asia-focused dry powder - money committed but not yet invested - was a record $291 billion at the end of 2018.

DCP's investors include Singapore sovereign wealth fund GIC Pte Ltd and state investor Temasek Holdings Pte Ltd, as well as Canadian public pension fund Caisse de depot et placement du Quebec (CDPQ), said a person with direct knowledge of the matter, declining to be identified as the matter was private.

DCP declined to comment on the investors.

The Hong Kong and Beijing-based private equity firm said it will primarily seek buyout and significant minority investment opportunities in sectors that benefit from consumption upgrade and industry consolidation in Greater China, such as consumer, industrial technology and healthcare.

DCP was set up in 2017 by Liu who was also a co-head of KKR's Asia private equity business, and Julian Wolhardt, a former senior KKR executive in the region after both worked with the U.S. buyout firm for 11 years. Prior to KKR, Liu and Wolhardt led Morgan Stanley's private equity business in Asia.

Both had led investments for KKR including in raw milk producer China Modern Dairy Holdings Ltd, home appliance maker Haier Electronics Group Co Ltd and leasing firm Far East Horizon Ltd.

DCP has invested about 30 percent of the capital raised in six firms mainly in China, including COFCO Meat, a unit of state-owned grain-to-real estate conglomerate COFCO, domestic medical device firm Venus Medtech, and Singapore-based electronic component maker MFS Technology, said the person.


(This story corrects the number of DCP's investments to six, not seven, and MFS's description in the last paragraph.)


(Reporting by Julie Zhu; Editing by Christopher Cushing)