China PM’s son eyes $1B fund for deals

Hong Kong-based New Horizon Capital, whose co-founders include the son of Chinese Premier Wen Jiabao, aims to raise a $1 billion private equity fund to invest in domestic companies ready to launch initial public offerings, according to sources with direct knowledge of the matter.

This would be the third and largest private equity fund for New Horizon, which was established in 2007.

New Horizon Capital recently completed raising between $600 million and $700 million for its latest fund, with capital commitments from Japan’s Softbank Corp. and Singapore state investor Temasek Holdings, the sources said.

New Horizon started pitching the fund as early as 2008, but found it tough going as a result of the financial crisis and suspended the fund until early 2009, the sources said.

“That was a very tough time, but now people are willing to pour money into the fund again since China is still the focus worldwide,” said one of the sources.

Softbank, run by influential Japanese tycoon Masayoshi Son, and Temasek were long-time investors since the firm launched its first fund in 2007, one of the sources added.

The sources declined to be identified because of the sensitive nature of Wen’s family background. A representative for New Horizon Capital could not be immediately reached for comment.

Wen Yunsong, also known as Winston Wen, helped form New Horizon Capital in 2005, a few years after graduating with an MBA from Kellogg School of Management at Northwestern University.

Between graduation and the launch of New Horizon Capital, Wen started a telecom equipment maker, whose key clients included large banks and securities firms, according to Chinese and Hong Kong media reports. Wen later sold the company.

China, which historically viewed private equity firms as speculators, is becoming more welcoming to foreign private equity funds that are boosting investments and creating jobs, which the government sees as key to maintaining social stability. Despite Wen’s professional background, New Horizon Capital is considered a foreign fund because of its legal structure and the foreign sources that make up its base of limited partners.

New Horizon Capital raised $500 million for its first fund in 2007. Wen and his management team include long-time friends from his U.S. days. “They have a very stable team … They were schoolmates; old friends. They know each other very well,” said another of the sources.

Private equity investment in China has a brief history, but New Horizon Capital has had some notable achievements.

It recently bought a large stake in Shenzhen-listed wind power producer Xinjiang Goldwind Science & Technology. Goldwind is looking to raise $1.5 billion via an IPO on the Hong Kong exchange later this year.

Other New Horizon investments, such as Yingli Green Energy and Kingsoft, have already gone public.

New Horizon Capital is also an investor in Shineway Group, China’s top meat processor, in a landmark buyout deal led by Goldman Sachs a few years ago. It is also an investor in Jiangsu Rongsheng Heavy Industries Co., China’s largest privately owned shipbuilder, along with Goldman Sachs and other funds. The company is seeking to go public, Reuters reported last year.

In addition to Goldman Sachs, New Horizon has co-invested with Bain Capital and Sequoia Capital from the United States and China’s Kunwu Jiuding Capital Co. and Kunwu Jiuding Capital Co. —George Chen, Asia Private Equity Correspondent, Reuters