China's Centurium Capital announced that it had received more than $2 billion in its debut fund.
The backer of domestic startup Luckin Coffee managed to receive the sum from global investors, also known as limited partners (LP); pension funds and sovereign wealth funds, Reuters reported. The firm was co-founded by former Warburg Pincus Asia Pacific head, David Li.
The fund also garnered interest from other parties, aside from the different investors. Some of the notable ones include the GIC Pte Ltd and Temasek Holdings of Singapore, the Ontario Teachers' Pension Plan from Canada, the China Investment Corp., and the US pension fund Washington State investment Board. This was learned from insiders with knowledge of the transaction.
Pressed for questions, Centurium and Temasek did not comment. Other investors were also silent about the matter. However, it is known that the US dollar fund will be used for Centurium's investments into Chinese firms that put up overseas structures and have created variable-interest entities.
The former head of Warburg Pincus Asia Pacific explained that 40 percent of the fund has already been funneled through five companies. The expectation is that the vehicle will be fully deployed at the end of 2020, with Centurium in control of the companies. The strategy of the company usually is to buy a significant amount of minority stakes in companies in the region, Alt Assets reported.
Luckin Coffee was one such company which they bought stakes in. The firm put about $180 million into the company, with other similar transactions in logistics services provider Keking and China Biologic Products, a bio-pharmaceutical firm. They are also invested in Happy Kids Education, an online education platform.
The transaction effectively brings Centurium in contact with China-focused private equity firms, all of whom have the same goal. These companies, along with several venture capital companies, managed to raise $17.3 billion in dollar-denominated funds during the first half of the year.
The Beijing-based company was established in 2017 by Li and other partners. Li had previous experience heading Warburg Pincus' Asian division and had been involved with significant investments for the US firm in China. This included a deal with car rental service CAR Inc. Li said that he had a 'dream' of launching their own similarly-minded firm.
The transaction with Luckin Coffee was hailed as a big risk. The company was China's answer to the US' Starbucks Corp and maintained a significant presence in China.