China's Centurium Capital raises over US$2b from GIC, Temasek, others

[HONG KONG] China's Centurium Capital, a big backer of domestic startup Luckin Coffee, said it has raised more than US$2 billion in its debut fund, giving the private equity firm more firepower to cut deals involving the world's second-largest economy.

The firm, co-founded by the former head of Warburg Pincus Asia Pacific, David Li, said in a statement on Wednesday that Centurium Capital Partners raised the sum in US dollars.

The fund secured strong interest from global investors, known as limited partners (LPs), such as pension funds, sovereign wealth funds and funds-of-funds, it said.

Investors in the fund include Singapore's GIC and Temasek Holdings, Canada's Ontario Teachers' Pension Plan, China Investment Corp (CIC) and US pension fund Washington State Investment Board, said two people with direct knowledge of the matter.

Centurium and Temasek declined to comment. All the other investors didn't respond to requests for comment.

The US dollar fund will help Centurium invest in Chinese firms that use overseas structures such as variable-interest entities.

Centurium joins several China-focused private equity and venture capital managers who raised US$17.3 billion in dollar-denominated funds in the first half of the year, versus US$13 billion over the same period last year, according to data provider Preqin.

Launched in March 2018, Centurium's maiden fund reached the first close of nearly US$1 billion three months later and has beaten the US$1.5 billion and US$1.98 billion fundraising targets since then.

BESPOKE SOLUTIONS

Beijing-based Centurium was set up in early 2017 by Mr Li and two other partners. Mr Li had worked with Warburg Pincus for 14 years and led several investments for the US buyout firm in China, including in top car rental service provider CAR.

"After helping several entrepreneurs fulfill their entrepreneurial dream for so many years, I also have my dream of launching our own (investment) firm," Mr Li told Reuters.

Centurium primarily seeks control and significant minority investment opportunities across China's consumer, services and healthcare sectors where it looks to boost operational efficiency and tackle structural deficiencies.

"The Chinese business environment nowadays needs a new generation of investors that combine the global PE best practice and local experience," Mr Li said.

"Instead of being a pure capital provider, firms like Centurium can better integrate with local markets and be more efficient and responsive to provide bespoke local solutions to new challenges and opportunities faced by Chinese entrepreneurs."

Centurium began to gain recognition last year when it made a big bet on Luckin Coffee, the Chinese challenger to Starbucks Corp. It invested about US$180 million in Luckin in the startup's first two fundraising rounds.

Mr Li said that Centurium has invested about 40 per cent of the capital raised in the debut fund in five firms in China and aims to fully deploy the fund by the end of next year.

Besides Luckin, Centurium's portfolio firms include Keking, an online logistics services provider, China Biologic Products , a biopharmaceutical firm which makes and sells plasma products, and online education platform Happy Kids Education. 

REUTERS