HongShan
 | |
Native name | 红杉中国 |
|---|---|
| Formerly | Sequoia Capital China Sequoia China |
| Company type | Private |
| Industry | Venture Capital |
| Founded | 2005 |
| Founders |
|
| Headquarters | Hong Kong |
Key people | Neil Shen (Founding and Managing Partner) |
| AUM | US$56 billion (2023) |
Number of employees | 300 (2023) |
| Website | www |
| Footnotes / references [1][2] | |
HongShan Capital Group (or HSG, Chinese: 红杉中国; pinyin: Hóngshān Zhōngguó) is a Chinese venture capital firm founded in 2005. It was previously the China investment arm of Sequoia Capital (Sequoia) and was known as Sequoia Capital China and Sequoia China before it was rebranded and spun-off as an separate entity.
HongShan is headquartered in Hong Kong with additional offices in Beijing, Shanghai, London, Singapore, and Shenzhen.[3]
In 2022, the firm raised around $9 billion from global institutional investors including sovereign wealth funds, pensions, endowment funds and family offices from the US, Europe, the Middle East and Southeast Asia.[4]
HongShan has expanded its focus over the years beyond early-stage investing to also cover growth stage, infrastructure, healthcare and consumer, and buyout funds. The firm manages around $56 billion in assets.[4]
Background
[edit]Sequoia China (2005 to 2023)
[edit]In 2005, Neil Shen and Zhang Fan co-founded Sequoia China with under the guidance of Sequoia partners Michael Moritz and Douglas Leone. The two were selected by Sequoia to lead the firm's venture in China.[2][5][1]
In 2009, Zhang resigned from Sequoia China for personal reasons leaving Shen to be entirely in charge of Sequoia China's operations. By that period, the firm had raised a combined $1 billion for three U.S. dollar-denominated China funds and 1 billion yuan for a local currency yuan-denominated investment fund.[2][6]
Afterwards Sequoia China raised more money, mostly from US institutional investors and built a successful investment record which included companies such as Alibaba Group, JD.com, Meituan and ByteDance. Historically 90% of returns came from consumer, consumer tech and healthcare fields. No other US investment manager had same level of success in China as Sequoia China. By 2023, Sequoia China had invested in over 1,000 projects.[1][2][5]
In June 2023, Sequoia announced that it would be splitting off Sequoia China as an separate entity and would be completed by 31 March 2024. This came at a time of rising tensions in China–United States relations where Chinese leaders did not want to see US investors reaping rewards from their companies and US leaders did not want to see money being used to invest in Chinese technology such as semiconductors. However Sequoia denied that rising tensions were the reasons for the split. Sequoia China would be rebranded as HongShan (a pinyin romanisation of its Chinese name, which means redwood) in English but its Chinese name remained the same. Going forward, the firm will be raising capital as a Chinese venture capital firm rather than as the Chinese arm of an American venture capital firm.[2][1][7][8]
HongShan (2023 to present)
[edit]In July 2023, HongShan announced that had set up and office in Singapore and was making plans to use it as a base to invest in Southeast Asia. It was speculated that it would be competing with Peak XV Partners, the Indian and Southeast Asian investment arm of Sequoia China that was also split off in June 2023. HongShan has stated there are no plans to open an office in the US.[7][8]
In October 2023, the United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party asked Sequoia in a letter to provide details about investments in artificial intelligence and other high-tech sectors made by it and HongShan. Members also questioned Sequoia if its decision to split-off HongShan would insulate some capital flows from US regulatory scrutiny. This was because HongShan relied on limited partners to finance deals so the split would not stop US institutional investors from continuing to invest in it. In addition, members also sated HongShan would be likely to scrap the national security screening mechanism that Sequoia had created to evaluate investments by its companies. Members also accused HongShan of funnelling US capital into investments that contributed to human rights abuses and military modernisation with examples being DeepGlint and ByteDance. Additional requests included identifying any limited partners domiciled in China or that manage funds for state-owned or affiliated entities and to confirm the number of HongShan's limited partners that are US investors. So far US limited partners were not targeted and institutional investors that invest in Hongshan are confident they can continue their relationship with HongShan after the United States Department of the Treasury finalises restrictions on outbound investment mandated by a executive order.[1][9]
In November 2023, it was reported that despite scrutiny from US lawmakers, several new investors signed on with HongShan. They include CalPERS and University of Washington Investment Management. Existing investors such as CPP Investment Board and Regents of the University of California added additional commitments.[1][8]
In July 2024, HongShan raised its first new fund as a separate entity. It raised 18 billion RMB ($2.5 billion) for its new fund to invest in startups.[10]
In October 2024, HongShan set up a London office to look for investment opportunities in Europe with plans to make overseas investments under the HSG brand name focusing on late stage and private equity deals in areas including consumer, consumer internet, healthcare and new energy. The company has nearly 10 portfolio investments in Europe, including Monzo Bank, a London-based digital bank; new energy firm GEO and designer brand Ami Paris. Its overseas investments are currently mostly in Asia, including Japan, South Korea and Southeast Asia.[11]
References
[edit]- ^ a b c d e f "Sequoia China Rebranding Is High-Stakes Leadership Test". Bloomberg.com. 9 November 2023. Archived from the original on 9 November 2023. Retrieved 18 November 2023.
- ^ a b c d e McMorrow, Ryan; Olcott, Eleanor; Wiggins, Kaye; Hammond, George (9 June 2023). "Neil Shen goes it alone in China after Sequoia split". Financial Times. Archived from the original on 18 January 2024. Retrieved 18 November 2023.
- ^ "FORM ADV for HONGSHAN CAPITAL ADVISORS LIMITED" (PDF). Securities & Futures Commission of Hong Kong.
- ^ a b "Sequoia Splits Into Three Firms Amid Geopolitical Tension". Bloomberg. Retrieved 6 June 2023.
- ^ a b Konrad, Alex. "How Neil Shen Built A Winner At Sequoia Capital China". Forbes. Archived from the original on 4 February 2021. Retrieved 18 November 2023.
- ^ "Sequoia Capital China founding partner Zhang resigns". Reuters. 2 February 2009. Archived from the original on 18 November 2023. Retrieved 18 November 2023.
- ^ a b Ruehl, Mercedes; Wiggins, Kaye (9 July 2023). "Sequoia China's push into Singapore sets up fight against Indian arm". Financial Times. Archived from the original on 18 November 2023. Retrieved 18 November 2023.
- ^ a b c Olcott, Eleanor; Ruehl, Mercedes; Wiggins, Kaye; Hammond, George; Kinder, Tabby (12 October 2023). "Neil Shen plots global expansion for Sequoia's China spin-off". Financial Times. Retrieved 18 November 2023.
- ^ "US House panel probes Sequoia's Chinese tech investments". Financial Times. Archived from the original on 19 October 2023. Retrieved 18 November 2023.
- ^ Kinder, Tabby (9 July 2024). "Sequoia Capital's former China unit raises new $2.5bn start-up fund". Financial Times. Retrieved 13 July 2024.
- ^ Lulu Yilun Chen (10 October 2024). "Neil Shen's HongShan Opens London Office, Eyes Europe Deals". Bloomberg. Retrieved 5 November 2024.
