The superficial logic behind Hillhouse's fundraising of 50 billion yuan

According to the solar terms, the Great Snow is approaching, but it seems that the spring of US dollar funds has come early.

Foreign media reported that Hillhouse Capital recently launched a new round of fundraising for a US dollar private equity fund, with a target size of approximately $7 billion (about 50 billion yuan). A person close to Hillhouse said that fundraising is a normal thing for funds, but there is no definite schedule at present. As for whether the size will be $7 billion, it's hard to say.

Firstly, there is a lack of large - scale investment opportunities with major themes at this time. It is estimated that there won't be blind - pool flagship funds worth tens of billions of dollars anymore.

For US dollar funds, the investment bandwidth is gradually narrowing. What are the biggest opportunities and themes at present? Of course, it's AI. But for startups, is AI an opportunity as big as or even bigger than the mobile Internet wave? If so, is this a suitable time to invest? These two questions remain to be verified.

As far as I know, a top - tier fund has hardly invested in pure - software AI applications. I just chatted with a friend who invests in AI, and he sighed that there are limited good projects, and he can't invest the money in his hand. So, he had to invest in consumer hardware. A better example of "having money to spend" is that I heard that a top - tier VC invested in an AI unicorn overseas when its valuation was in the tens of billions of dollars.

Looking at the US dollar funds that have announced fundraising this time, both Monolith and Source Code Capital have clearly stated that they are actively reducing their scales. It shows that the times have really changed. In such a situation, large funds don't need to pursue large - scale fundraising just for the sake of "face".

Secondly, in the past few years, Hillhouse has continuously raised funds in themes such as infrastructure, the secondary market, and RMB funds. For example, a real - estate fund with a scale of over $2 billion and a secondary - market fund of about 6 billion yuan... Intermittently and in bits and pieces, it has raised a considerable amount of money.

By the way, a friend guessed that this fundraising news might have come from Hillhouse's recent US dollar AGM (Annual General Meeting). AGM is the most important communication occasion between investment institutions and LPs every year and is also a key window for the industry to judge the sentiment of the primary market. Although the wave of chasing AUM has passed, the popularity of US dollar funds is indeed picking up, and foreign investors are re - examining and allocating Chinese assets with increasing enthusiasm. The improvement of the exit environment this year, especially the reopening of the window for Hong Kong IPOs, has particularly strengthened the confidence of foreign LPs.

To allocate Chinese assets, Hillhouse, as one of the few domestic leading asset management institutions that can cover the entire cycle and all categories, still firmly occupies a core position among foreign LPs. Meanwhile, Hillhouse has a number of high - quality assets waiting for IPO, which will further enhance its attractiveness in fundraising.

The Rumored $7 Billion

In 2021, Hillhouse raised $18 billion (over 100 billion yuan), and its management scale further increased to over 600 billion yuan. It not only set a new fundraising record for itself but also refreshed the record in Asian private - equity fundraising history at that time.

If the $7 billion figure disclosed by Reuters this time is true, it will become the largest single PE fund launched by an Asian local institution since 2022.

As one of the largest PE firms in Asia, Hillhouse has largely relied on the flexibility and expansion speed brought by the Blind Pool structure in the past. This mechanism allows investment institutions to capture leading assets across industries and regions in a rapidly changing market, which is also the basis for its strong growth, merger, and cross - border transaction capabilities.

For example, the $18 billion fifth - phase US dollar fund raised by Hillhouse in 2021 was one of the largest blind - pool funds in Asian history. Such a large - scale fund means that LPs have a high degree of trust in Hillhouse and are willing to basically hand over the asset - allocation rights to the Hillhouse team. In the past cycle of loose liquidity, rising valuations, and the expansion of technology and consumption, Hillhouse was able to quickly complete cross - border acquisitions such as Philips Home Appliances and George Clinical through its scale advantage, and there were iconic large - scale transactions almost every year.

However, this characteristic has brought challenges in the current cycle. The blind - pool structure requires deployment to be completed within a relatively fixed time, but the current global downward trend in valuations, the reconstruction of investment logic in technology and consumption, and the tightening of exit paths have made it difficult to "quickly invest a large amount of money".

Moreover, if we look at a broader perspective, we will find that Hillhouse has never stopped fundraising in recent years.

In March this year, Rava Partners, Hillhouse's real - estate investment platform, announced the preparation of its second real - estate fund, Hillhouse Real Asset Opportunities Fund II, with a proposed fundraising scale of over $2 billion, far exceeding the scale of the first phase. Last year, HHLR Advisors, a subsidiary of Hillhouse, completed the fundraising of a secondary - market fund of about 6 billion yuan, clearly increasing the allocation ratio of Chinese assets and continuing to focus on the A - share market. In addition, Hillhouse has also continuously promoted fundraising in the directions of infrastructure, real estate, and multi - industry RMB funds, forming a fundraising structure of "diversification, multi - strategies, and continuity".

Therefore, for such a large - scale asset management platform that has never stopped fundraising, choosing to pursue multiple fundraising pipelines in parallel rather than betting on a single large - scale US dollar flagship fund may be a more practical approach.

Meanwhile, Hillhouse's global investment pace has not slowed down. In the past three years, Hillhouse has maintained a steady pace of cross - border acquisitions: it acquired Philips' home - appliance business for $3.7 billion in 2021, George Clinical, an Australian medical - research institution, in 2023, and Samty Holdings in Japan for $1.1 billion in 2024. Japan is a major focus. At the end of last year, Hillhouse appointed Tomohiro Kikuta, a former partner at Bain Capital, to lead its expansion in Japan. In March this year, Hillhouse announced again that it will invest $1 - 2 billion in Japan every year and plans to double the size of its local team.

For foreign LPs who hope to establish a stable exposure to the Chinese market, Hillhouse is still a key bridge. More importantly, Hillhouse still has a number of high - quality assets queuing up for IPO, giving it a natural advantage in the new round of fundraising window. In addition, in March this year, Hillhouse's Chief Operating Officer revealed that there was still about $6 billion of the fifth - phase fund (with a scale of $20.5 billion) unallocated, indicating that it still has sufficient ammunition for global deployment.

"Some US dollar LPs have returned, and more will come next year"

The sentiment of US dollar LPs is indeed warming up, which is most clearly reflected in the fundraising announcements.

In the second half of this year, a number of US dollar funds, including Monolith, Photosynthetic Ventures, Qiming Venture Partners, Black Ant Capital, and Yingce Capital, have spread the news of raising new - phase US dollar funds. Not long ago, some institutions have announced the completion of a new round of fundraising: Monolith's US dollar fund II and RMB fund I have reached their final closings, and the total scale of the new dual - currency funds is $488 million; Source Code Capital has completed the fundraising of a new $600 - million growth - stage fund, also covering both RMB and US dollars.

Although no specific LP list was provided, according to our understanding, the reinvestment rate of Monolith's old LPs in its US dollar fund exceeded 100%, and it was over - subscribed within a month; the LPs of Source Code's new fund are mainly industrial investors and a small number of long - term financial investors, and the overall duration of the fund is as long as 25 years.

This year, a colleague of ours wrote an article titled "Are US dollar funds making a comeback?" and mentioned that "AI +, robotics, and pharmaceuticals have become important directions for this round of fundraising." At that time, a friend also talked to me about this topic and agreed with the above statement, describing it as a "structural recovery". This also conforms to the general rule that when a frozen river thaws, it always starts from local areas.

The recovery is naturally closely related to the grand narrative of Chinese technology. I heard from a friend at Oasis that they gave a speech at this year's SuperReturn, with the theme centered on the era of intelligent agents and the key role China plays in it. When the founding partner Zhang Jinjian took the stage, half of the audience left. But by the end of the speech, the venue was full.

This wave of recovery of US dollar funds is also inseparable from the current improvement in the exit environment, especially the reopening of the Hong Kong IPO window, which makes foreign LPs more optimistic about the liquidity of Chinese assets. According to data from ChinaVenture Jiacchuan, from January to July 2025, 49 new stocks were listed on the Hong Kong Stock Exchange, raising 103.4 billion yuan, a 30% increase compared with the same period last year, and the financing amount increased by more than 639% year - on - year, making it the global champion in IPO fundraising.

The recovery is not only happening in China. In the broader Asian market, there are also signs of warming up. It is reported that some LPs have begun to actively reduce their allocation to the US market and redirect their funds to Asia. Dealogic data shows that so far this year, the total value of private - equity firms' acquisitions of Asian target companies has reached $130 billion, exceeding the annual totals of 2024 and the previous year.

Meanwhile, a number of global companies are stepping up to raise substantial acquisition funds focused on Asia, which are expected to be completed within the next 12 to 18 months.

According to foreign media reports, KKR launched the fundraising for its fifth Asian private - equity fund last week, with a target size of up to $15 billion, focusing on sectors such as consumption and life sciences. Its co - CEO Joe Bae previously revealed that half of the private - equity capital returned to investors in 2025 will come from Asia.

Blackstone has raised over $10 billion for its third Asian private - equity fund, with a maximum fundraising limit of $12.9 billion. Blackstone has not commented on this yet.

Swedish private - equity giant EQT announced as early as July that it plans to complete the fundraising for a new Asian acquisition fund in 2026, with a target size reaching the upper limit of $14.5 billion. Its CEO Per Franzén said bluntly that "Asia is a huge growth opportunity."

"Some US dollar LPs have returned this year, and more will come next year, just waiting for technology companies like Unitree to go public," a VC managing partner recently told us. Fundamentally, capital is profit - seeking. After three difficult years, a series of facts in China are making people believe that even though the opportunities in the era are shrinking, China is still an inevitable promised land.

This article is from the WeChat official account "ChinaVenture". Author: Wei Xianghui. Editor: Liu Yanqiu. Republished by 36Kr with permission.