Firms & Funds

Orchid Asia targets $900 mln for Chinese franchises

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Asia, China, private equity, venture capital, Preqin
A customer counts Chinese yuan banknotes as she purchases vegetables at a market in Beijing, China, May 9, 2016. REUTERS/Kim Kyung-Hoon.
  • First and final close scheduled for November
  • Fund V, a 2011 vintage, netting 28.4 pct IRR
  • PA Public Schools commits up to $75 mln to new fund

Orchid Asia Group is raising $900 million for its newest flagship private equity fund.

Orchid Asia VII will likely hold a first and final close next month, Hamilton Lane wrote in a memo for Pennsylvania Public School Employees’ Retirement System. The $53.5 billion retirement system committed up to $75 million to the fund at its Oct. 5 board meeting, which will be finalized after negotiation of terms and conditions.

The general partnership group will commit at least $50 million to the fund, the Hamilton Lane memo says. An additional co-investment pool for Orchid Asia employees could total as much as $68 million.

The firm is led by Gabriel Li, with Edmond Wong and Teck-Shang Ang holding the other two seats on Fund VII’s investment committee.

Orchid will use Fund VII to back management teams of franchise businesses in China, typically seeking opportunities in the branded consumer products and services, retail, healthcare, technology, media and telecom and specialty manufacturing sectors. The fund will likely make 20 to 25 investments with equity checks coming in at $20 million to $150 million.

The firm’s investments often come in the form of growth equity. Last year, Orchid sold its minority stake in funeral-services business Nirvana Asia to CVC Capital Partners for HK$800 million ($102.5 million), an article on the firm’s website says.

Pennsylvania PSERS is an LP in the firm’s two previous flagship funds. Orchid’s fifth fund, a $650 million 2011 vintage fund, was netting a 28.4 percent internal rate of return and 1.4x multiple as of June 30, according to investment documents. Fund VI, which closed on $920 million in 2014, netted a 10.4 percent IRR and 1.1x multiple as of that date.

Orchid, headquartered in Hong Kong with offices in Beijing, Shanghai and Guangzhou, could not be reached for comment.

Action Item: For more on Orchid Asia, visit www.orchidasia.com/

A customer counts Chinese yuan banknotes as she purchases vegetables at a market in Beijing on May 9, 2016. Photo courtesy Reuters/Kim Kyung-Hoon