Orchid Capital has closed its third and largest fund, Orchid Asia III, raising more than $180 million from institutional LPs and high net worth individuals from the United States, Europe and the Middle East.
Only two LPs are publicly disclosed – New York-based Invesco Capital and Milan, Italy-based CDB Westech.
Orchid Managing Director Gabriel Li said the original target for the fund was $125 million, but the group was able to exceed that goal, given its track record and experience.
The firm, which typically takes the lead when investing in portfolio companies, invested in Ctrip.com International (Nasdaq: CTRP), a Shanghai-based provider of travel-related services. Ctrip launched a $75 million IPO in 2004 and saw its stock price double immediately, which helped return 20X on Orchid’s investment, Li said. Other investors in Ctrip include The Carlyle Group and IDG Technology Management, among others.
Orchid also invested in EachNet, an online auction site in China. In 2003, eBay bought the remaining shares of EachNet that it didn’t own for about $150 million in cash, returning 5X Orchid’s investment.
Orchid Holdings, the firm’s first fund, was a 1993 vehicle that closed with $42 million, making it one of the first international private equity firms in China. Orchid Asia II raised $67 million in 1997.
Similar to the firm’s earlier funds, Orchid Asia III is identified as a growth fund. “But we don’t like to identify our firm as either venture, growth or buyout,” Li said. “We’re a hybrid firm that prefers to retain considerable latitude in the kind of investments we make.”
Orchid typically invests between $5 million to $15 million over the life of a portfolio company. Li said he expects fund III to invest in up to 15 companies.
The firm – which has offices in San Francisco, Hong Kong and Shanghai – focuses on deals in China, Taiwan and Hong Kong, but will probably put most of its money into China-based companies.
Fund III has already made its first investment, a $9 million participation in Shanghai’s SCGC, an industrial gas company run by former executives of the British Oxygen Company. Li said the firm is close to signing off on two other investments.
Li, who learned the China trade as an employee of McKinsey Co. in China, joined Orchid in 1997. In 2000, he left to join The Carlyle Group, but re-joined Orchid in 2003, where he has been deeply involved in raising the new fund alongside firm founder Peter Joost.
In regards to deal flow, Li says that the firm receives from 50 to 60 pitches a month.