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Hillhouse Investment

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Hillhouse Capital Group
Company typePrivate
IndustrieFinancial services
Gegründet2005; 19 years ago (2005)
GründerLei Zhang
Hauptsitz
Singapur
Area served
East Asia
Southeast Asia
North America
Europe
AUMIncrease US$73.3 billion (31 July 2021)[1]
Websitewww.hillhousecap.com

Hillhouse Capital Group is a global private equity firm with an East Asian heritage.[2][3][4] Hillhouse was founded by Lei Zhang in 2005 with initial seed capital from the Yale University endowment and invests across East Asia, Southeast Asia, North America, and Europe.[5] Hillhouse is headquartered in Singapore and maintains offices in Beijing, Hong Kong, London, New York City and Shanghai.[6]

Hillhouse's assets under management ("AUM") were US$73.3 billion as of July 2021.[1] As of August 2021, Hillhouse is the largest private equity fund operating in Asia with the completion of fundraising for its US$18 billion fifth flagship private equity fund breaking the previous record set by KKR's US$15 billion pan-Asia private equity fund raised that same year.[7]

Hillhouse manages capital for institutional clients such as university endowments, foundations, sovereign wealth funds, pension funds, and family offices and is known for its avoidance of publicity.[8][9] Hillhouse is a long-term fundamental research-driven equity investor, investing in all equity stages in sectors including technology, consumer, healthcare, and financials services.[10][11]

History

Lei Zhang founded Hillhouse Capital Group in June 2005 with an initial US$20 million of seed capital from the Yale University endowment through David Swensen, Yale's Chief Investment Officer at the time.[12] In reference to its historical ties with the Yale endowment, the company is named after Hillhouse Avenue in New Haven, one block from where the Yale University investment office was previously located.[12] According to the Financial Times, Zhang built Hillhouse by being one of the first investment firms to back China's burgeoning internet sector, including investing in Tencent Holdings, a large internet company. Hillhouse was also one of the first firms to invest in JD.com, the e-commerce company.[12]

By 2017, the firm had participated in more private equity acquisitions in the Asia-Pacific region than any other private equity firm, totaling $26 billion worth of transactions.[13] GaoTeng Global Asset Management, a partnership between Tencent Holdings and Hillhouse, launched GaoTeng Asian Income Fund in November 2018, to focus on investing in government and corporate bonds.[14]

In 2020, Hillhouse spun off its venture capital unit into an independent fund. The new fund is called GL Ventures.[15] As of 2020, Hillhouse was an investor in companies such as Airwallex.[16] In 2021, among Hillhouse Capital Management's investments were Xtep,[17] JD Health International, Miniso Group Holding, XPeng, Pinduoduo, BeiGene, and Zoom Video Communications.[citation needed] Hillhouse Capital was nearing raising US$18 billion to back three new funds in May 2021, higher than the projected $13 billion in April 2021, according to reports, with $10 billion to be allocated to buyouts, and the rest "split between growth equity and venture." The company at the time was managing $100 billion.[18] In August 2021 Hillhouse completed fundraising for its fifth flagship private equity investment fund at US$18 billion, the largest amount of capital raised by any private equity firm in Asia and breaking the previous record set by KKR's US$15 billion pan-Asia private equity fund also raised in 2021.[7]

In 2021, the Financial Times referred to Hillhouse Capital as a "technology private equity investor."[19] In 2022, it invested in J&T Express, a delivery company,[20] and it also invested in EventX, a company in Hong Kong, through its early-stage investment arm GL Ventures.[21]

In 2022, Hillhouse started its first real estate-focused fund with a total investment of more than $2 billion. The fund was called the Hillhouse Real Asset Opportunities Fund (RAOF).[22]

Performance

Hillhouse's rapid growth stemmed from its investing track record, with up to 52% annualized returns from inception until 2012[8][23][24] and continued strong performance as the firm scaled.[25]

Notable investments

Tencent Holdings Ltd: Some original $20 million provided from Yale was invested in Tencent Holdings in 2005. It was Hillhouse's earliest investment and one of their most profitable.[9]

JD.com: Hillhouse was also an early investor in JD.com. At the time of the listing of JD.com on NASDAQ in May 2014, the company was valued at $26 billion. Hillhouse's original $255 million investment was, at the time of the IPO, valued at $3.9 billion.[26]

Blue Moon: Hillhouse invested in Blue Moon, a liquid detergent maker, in 2010 as its only outside institutional investor. In 2013, Blue Moon was ranked #1 in the China Brand Power Index published by Ministry of Industry and Information Technology. The market share of its liquid detergent has been ranked #1 in China for the past eight consecutive years, from 2010 until 2018.[citation needed]

Belle International: In July 2017 Hillhouse purchased for $6.8 billion the largest women's Chinese footwear company, Belle International Holdings Ltd.[27][28]

Global Logistic Properties: Hillhouse, together with Hopu Investment Management, purchased Singapore-based warehouse operator Global Logistic Properties in 2017 for $12 billion. At the time, that was the largest buyout of an Asian company.[28]

Little Freddie: In 2018 Hillhouse began investing in the food sector, including organic baby food and snack manufacturer Little Freddie; a Californian craft beer maker and a pet food brand.[29]

Miniso: In October 2018 Hillhouse and Tencent signed a strategic investment agreement with Japanese-style retailer Miniso worth RMB 1 billion ($145.6 million).[30]

Philips Domestic Appliances: In August 2021 Hillhouse closed the deal of acquisition of the Domestic Appliances business of Philips.[31]

Joint ventures

Hillhouse established an exclusive joint venture focused on China with the US healthcare provider, Mayo Clinic. Hillhouse works with the Mayo organization to expand its healthcare outreach in China.[32]

In November 2017 Peet's Coffee China, a partnership between Hillhouse Capital and San Francisco-based Peet's Coffee, opened the first Peet's Coffee roastery in Shanghai.[33]

Investment philosophy

Hillhouse does deep and fundamental research on industries and business models, and applies the value investing philosophy in local contexts while investing in different geographies.[12]

According to the Financial Times, Hillhouse will often bring together leaders of their portfolio companies to share insights, believing that it is beneficial for executives to learn from one another.[12]

When it comes to buyout investments in traditional industries Hillhouse has argued that technological innovation can be harnessed for job creation, saying that technology can act as an "equalizer" as opposed to a "disruptor."[34][35]

Hillhouse also believes that China's business model can be applied to other emerging markets and is therefore bringing that model to developing nations in Asia, such as in Indonesia where Hillhouse launched a joint venture between mobile messaging platform WeChat and Indonesia's giant communications and media conglomerate, Global Mediacom.[36]

Notable investors

According to the Wall Street Journal, Stanford University pledged to invest about US$200 million with Hillhouse in August 2015.[37] With Stanford's investment, the firm manages "money for at least six of the 10 wealthiest universities in the U.S."[38]

The other university investors in Hillhouse include Princeton University, Massachusetts Institute of Technology, University of Pennsylvania, University of Texas, and Yale University.[37][39]

CPPIB committed US$200 million to Fund II in 2014, US$300 million to Fund III in 2016 and US$300 million to Fund IV in 2018.[40]

References

  1. ^ a b "Hillhouse Capital Advisors". docoh.com.
  2. ^ "Hillhouse in talks to take developer SOHO China private, sources say". CNBC. 2020-11-13. Retrieved 2021-01-28.
  3. ^ Zhu, Kane Wu, Julie (2020-08-20). "Ex-Warburg real estate veteran to team up with Hillhouse". Reuters. Retrieved 2021-01-28.{{cite news}}: CS1 maint: multiple names: authors list (link)
  4. ^ "Hillhouse Capital to Bid for Thyssenkrupp Elevator Unit". Bloomberg.com. 2019-11-18. Retrieved 2021-01-28.
  5. ^ Nadeem, M. (12 January 2015). "Hillhouse Capital Management Cuts Passive Stake". Insider Monkey. Retrieved 3 March 2015.
  6. ^ "Hillhouse Capital to Combine Singapore Offices in New Location". Bloomberg L.P. December 15, 2022.
  7. ^ a b "EXCLUSIVE Hong Kong's PAG seeking to raise $9 bln with new buyout fund".
  8. ^ a b "Low-profile Beijing fund with envious record" (subscription only), ft.com, January 12, 2014. Partially retrieved 2015-08-18.
  9. ^ a b Hu, Bei (20 January 2015). "Hillhouse Capital Said to Raise $2 Billion Private Equity Fund". Bloomberg Business. Retrieved 3 March 2015.
  10. ^ "高瓴资本张磊：价值投资成PE服务实体重要组成部分". Baidu Financial. March 2014. Retrieved 10 December 2019.{{cite web}}: CS1 maint: url-status (link)
  11. ^ "高瓴资本张磊：何谓长期结构性价值投资？". www.sohu.com. Retrieved 2019-12-10.
  12. ^ a b c d e Sender, Henny (20 June 2014). "Zhang Lei has Lunch with the FT". Financial Times. Retrieved 20 April 2015.
  13. ^ Hu, Bei; Browning, Jonathan (14 February 2018). "Asia's Biggest Private Equity Acquirer Is Seeking $6 Billion". Bloomberg.com. Retrieved 11 November 2018.
  14. ^ "Tencent, Hillhouse-backed GaoTeng launches fund to invest in debt securities". DealStreetAsia. Retrieved 2018-11-11.
  15. ^ "Private Equity Giant Hillhouse Sets Up 10 Billion Yuan Venture Fund - Caixin Global". www.caixinglobal.com. Retrieved 2021-04-17.
  16. ^ "Airwallex aims to upend global payments system", Henny Sender (7 July 2020), Financial Times. Retrieved 17 May 2022.
  17. ^ "China’s Xtep Closes At New Record On Hillhouse Investment; Ding Clan’s Fortune Tops $2 Bln", Russell Flannery, Forbes Staff (18 June 2021), Forbes. Retrieved 18 May 2022.
  18. ^ "Hillhouse Builds Investing War Chest With $18 Billion Raise", Lulu Yilun Chen (7 May 2021), Bloomberg. Retrieved 18 May 2022.
  19. ^ "Snow Lake to liquidate Asia fund after executives quit", Tabby Kinder, Leo Lewis (4 November 2021), Financial Times. Retrieved 18 May 2022.
  20. ^ "Title", Author (18 February 2022), Forbes. Retrieved 18 May 2022.
  21. ^ "Hong Kong’s offline and virtual events platform EventX closes $18M Series B", Rita Liao (16 February 2022), TechCrunch. Retrieved 18 May 2022.
  22. ^ Cole, Michael (August 21, 2022). "CPPIB Boost Hillhouse Real Estate Fund to Final Close- Mingtiandi". Mingtiandi. Retrieved December 6, 2022.
  23. ^ McEnery, Thornton, "The 15 Biggest Asian-Based Hedge Funds", businessinsider.com, May 17, 2011. Retrieved 2015-12-21.
  24. ^ 804/Zhang-Value_Investing_Congress_West_2010.pdf [dead link] valuewalk.com, 2015/04.
  25. ^ "Research & Rankings: Top of the Hill" Archived 2015-05-18 at the Wayback Machine, Institutional Investor's Alpha/cenveomobile.com, Summer 2014. Retrieved 2016-01-11.
  26. ^ "Hillhouse, DST And Capital Today To Exit In JD.Com's $500M Follow-On Offering". China Money Network. 25 November 2014. Retrieved 3 March 2015.
  27. ^ "What China's Leading Tech Investor Saw In a Traditional Shoe Company". Fortune. Retrieved 2018-11-20.
  28. ^ a b Hu, Bei; Browning, Jonathan (14 February 2018). "Asia's Biggest Private Equity Acquirer Is Seeking $6 Billion". Bloomberg.com. Retrieved 20 November 2018.
  29. ^ Hu, Bei (30 October 2018). "China's Hunger for Safe Food Attracts Tencent-Backer Hillhouse". www.bloomberg.com. Retrieved 2018-12-02.
  30. ^ "Tencent, Hillhouse Agree to $145M Deal With Retailer MINISO - Mingtiandi". Mingtiandi. 2018-10-05. Retrieved 2018-12-02.
  31. ^ "Philips Sells Appliances to Hillhouse in $4.4 Billion Deal". Bloomberg.com. 25 March 2021.
  32. ^ "Mayo and Hillhouse Capital China for the first time to develop flexible business model of medical services". Getin. 27 January 2015. Archived from the original on 2015-04-02. Retrieved 3 March 2015.
  33. ^ "Peet's opens Shanghai cafe and roastery in first international foray". SFChronicle.com. 2017-11-22. Retrieved 2019-12-16.
  34. ^ "What China's Leading Tech Investor Saw In a Traditional Shoe Company". Fortune. Retrieved 2020-01-07.
  35. ^ "Goldman Sachs | Talks at GS - Lei Zhang, Founder and CEO of Hillhouse Capital". Goldman Sachs. Retrieved 2020-01-07.
  36. ^ Sender, Henny (20 June 2014). "Zhang Lei has Lunch with the FT". Financial Times. Retrieved 3 March 2015.
  37. ^ a b York, Mia Lamar in Hong Kong and Timothy W. Martin in New (17 August 2015). "Stanford Is Giving This Chinese Investor $200 Million". Wall Street Journal. Retrieved 2019-12-31.
  38. ^ Lamar, Mia, and Timothy W. Martin, "Stanford to hand $200 million to Chinese fund manager", MarketWatch, August 18, 2015. Retrieved 2015-08-18.
  39. ^ Heles, Thierry (19 August 2015). "Stanford moves into Hillhouse with $200m". Global University Venturing. Retrieved 31 December 2019.{{cite web}}: CS1 maint: url-status (link)
  40. ^ "Private Equity Asia | CPPIB | Canada Pension Plan Investment Board". www.cppib.com. Retrieved 2019-12-31.
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