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Hillhouse Investment

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Hillhouse Investment Management Ltd.
Company typePrivate
IndustryFinancial services
Founded2005; 19 years ago (2005)
FounderLei Zhang
Area served
East Asia
Southeast Asia
North America
Europe
AUMIncrease US$73.3 billion (31 July 2021)[1]
Websitewww.hillhouseinvestment.com

Hillhouse Investment 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 has Asian offices in Singapore, Hong Kong, Beijing and Shanghai with additional international offices in New York City and London.[6]

Hillhouse's assets under management ("AUM") were US$73.3 billion as of July 2021.[1] In October 2021, Hillhouse raised US$18 billion for its 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.[8][9] Hillhouse is a long-term fundamental research-driven equity investor, investing in all equity stages in sectors including consumer, healthcare, technology, and financials services.[10]

History

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Lei Zhang founded Hillhouse Investment 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.[11]

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.[12]

In 2020, Hillhouse spun off its venture capital unit into an independent fund. The new fund is called GL Ventures.[13] As of 2020, Hillhouse was an investor in companies such as Airwallex.[14] Hillhouse 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.[15] 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 2022, Hillhouse started its first real estate-focused fund, the Hillhouse Real Asset Opportunities Fund (RAOF), with a total investment of more than $2 billion.[16]

Performance

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Hillhouse's rapid growth stemmed from its investing track record, with up to 52% annualized returns from inception until 2012[8][17][18] and continued strong performance as the firm scaled.[19]

Notable investments

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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 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.[20]

Blue Moon: Hillhouse invested in Blue Moon, a liquid detergent maker, in 2010 as its only outside institutional investor.[21][22]

Belle International: In July 2017, Hillhouse purchased footwear company Belle International for $6.8 billion.[23][24]

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, it was the largest buyout of an Asian company.[24]

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.[25]

Miniso: In October 2018, Hillhouse signed a strategic investment agreement with Japanese-style retailer Miniso worth RMB 1 billion ($145.6 million).[26]

Philips Domestic Appliances: In August 2021, Hillhouse closed the deal of acquisition on the global domestic appliances business from Dutch conglomerate Philips.[27]

LifeStyles Healthcare: In December 2020, Hillhouse invested in Lifestyles Healthcare, an Australian global manufacturer of sexual wellness products. The company entered the Chinese market in 2006 after acquiring Jissbon.[28]

Gimborn: In 2016 Hillhouse acquired Gimborn, a German producer of cat litter and pet supplements, for an undisclosed sum.[29]

Zoom: Hillhouse was an investor in Zoom Video Communications in an early funding round in February 2015.[30]

Peet's Coffee: In 2017, Peet’s announced the formation of Peet’s Coffee China, an independently run joint venture formed by Peet’s Coffee and Hillhouse.[31]

BeiGene: Hillhouse co-led a round of financing for biotechnology company BeiGene in May 2015.[32]

Joint ventures

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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.[33]

In November 2017, Peet's Coffee China, a partnership between Hillhouse and San Francisco-based Peet's Coffee, opened the first Peet's Coffee roastery in Shanghai.[34]

Investment philosophy

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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.[11]

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.[11]

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."[35][36]

Notable investors

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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

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  1. ^ a b "Hillhouse Capital Advisors". docoh.com.
  2. ^ "Hillhouse in talks to take developer SOHO China private, sources say". CNBC. 13 November 2020. Retrieved 28 January 2021.
  3. ^ Zhu, Kane Wu, Julie (20 August 2020). "Ex-Warburg real estate veteran to team up with Hillhouse". Reuters. Retrieved 28 January 2021.{{cite news}}: CS1 maint: multiple names: authors list (link)
  4. ^ "Hillhouse Capital to Bid for Thyssenkrupp Elevator Unit". Bloomberg.com. 18 November 2019. Retrieved 28 January 2021.
  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. 15 December 2022.
  7. ^ a b Wu, Kane (28 October 2021). "Hong Kong's PAG seeking to raise $9 bln with new buyout fund". Reuters.
  8. ^ a b "Low-profile Beijing fund with envious record" (subscription only), ft.com, 12 January 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. ^ Witkowsky, Chris (26 March 2020). "Hillhouse runs up against coronavirus downturn with ambitious target for next fundraising". Buyouts. Retrieved 5 December 2023.
  11. ^ a b c Sender, Henny (20 June 2014). "Zhang Lei has Lunch with the FT". Financial Times. Retrieved 20 April 2015.
  12. ^ Hu, Bei; Browning, Jonathan (14 February 2018). "Asia's Biggest Private Equity Acquirer Is Seeking $6 Billion". Bloomberg.com. Retrieved 11 November 2018.
  13. ^ "Private Equity Giant Hillhouse Sets Up 10 Billion Yuan Venture Fund - Caixin Global". www.caixinglobal.com. Retrieved 17 April 2021.
  14. ^ "Airwallex aims to upend global payments system", Henny Sender (7 July 2020), Financial Times. Retrieved 17 May 2022.
  15. ^ "Hillhouse Builds Investing War Chest With $18 Billion Raise", Lulu Yilun Chen (7 May 2021), Bloomberg. Retrieved 18 May 2022.
  16. ^ Cole, Michael (21 August 2022). "CPPIB Boost Hillhouse Real Estate Fund to Final Close- Mingtiandi". Mingtiandi. Retrieved 6 December 2022.
  17. ^ McEnery, Thornton, "The 15 Biggest Asian-Based Hedge Funds", businessinsider.com, 17 May 2011. Retrieved 2015-12-21.
  18. ^ 804/Zhang-Value_Investing_Congress_West_2010.pdf [dead link‍] valuewalk.com, 2015/04.
  19. ^ "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.
  20. ^ "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.
  21. ^ Stevenson, Alexandra (2 April 2015). "The Chinese Billionaire Zhang Lei Spins Research Into Investment Gold". The New York Times. Retrieved 1 December 2023.
  22. ^ Feng, Venus (16 December 2020). "Detergent Turns Former Teacher Into One of China's Richest Women". Bloomberg.com. Retrieved 1 December 2023.
  23. ^ "What China's Leading Tech Investor Saw In a Traditional Shoe Company". Fortune. Retrieved 20 November 2018.
  24. ^ 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.
  25. ^ Hu, Bei (30 October 2018). "China's Hunger for Safe Food Attracts Tencent-Backer Hillhouse". www.bloomberg.com. Retrieved 2 December 2018.
  26. ^ "Tencent, Hillhouse Agree to $145M Deal With Retailer MINISO - Mingtiandi". Mingtiandi. 5 October 2018. Retrieved 2 December 2018.
  27. ^ "Philips Sells Appliances to Hillhouse in $4.4 Billion Deal". Bloomberg.com. 25 March 2021.
  28. ^ Pei Li and Dong Cao (16 February 2023). "Jissbon Condom Maker Lifestyles China Weigh $300 Million HK IPO, Sources Say". Bloomberg L.P.
  29. ^ "Hillhouse Capital acquires Gimborn from Penta Investments". PetWorldwide. 10 May 2016. Retrieved 1 December 2023.
  30. ^ McDonald, Michael; Chen, Lulu Yilun (28 April 2020). "From investments in Tencent to Zoom, Hillhouse founder Lei Zhang is one of the world's richest financiers". The Economic Times. Retrieved 5 December 2023.
  31. ^ Phillips, Justin (22 November 2017). "Peet's opens Shanghai cafe and roastery in first international..." San Francisco Chronicle. Retrieved 5 December 2023.
  32. ^ Garde, Damian (12 May 2015). "China's BeiGene banks $97M to get its cancer drugs into the clinic". Retrieved 5 December 2023.
  33. ^ "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 2 April 2015. Retrieved 3 March 2015.
  34. ^ "Peet's opens Shanghai cafe and roastery in first international foray". SFChronicle.com. 22 November 2017. Retrieved 16 December 2019.
  35. ^ "What China's Leading Tech Investor Saw In a Traditional Shoe Company". Fortune. Retrieved 7 January 2020.
  36. ^ "Goldman Sachs | Talks at GS - Lei Zhang, Founder and CEO of Hillhouse Capital". Goldman Sachs. Retrieved 7 January 2020.
  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 31 December 2019.
  38. ^ Lamar, Mia, and Timothy W. Martin, "Stanford to hand $200 million to Chinese fund manager", MarketWatch, 18 August 2015. Retrieved 2015-08-18.
  39. ^ Heles, Thierry (19 August 2015). "Stanford moves into Hillhouse with $200m". Global University Venturing. Retrieved 31 December 2019.
  40. ^ "Private Equity Asia | CPPIB | Canada Pension Plan Investment Board". www.cppib.com. Retrieved 31 December 2019.
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