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Hillhouse's fundraise comes amid Asia deal rebound

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Firm expanding globally with new Tokyo office

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Hillhouse previous fund raised record $18 billion in Asia

By Kane Wu and Yantoultra Ngui

HONG KONG/SINGAPORE, Nov 26 (Reuters) - Hillhouse

Investment has launched fundraising for its next private equity

fund targeting $7 billion, two sources with knowledge of the

matter said, in a key test of investor appetite as deal activity

gathers pace in Asia.

The fundraising initiative by the investment firm, founded

in 2005 by China-born dealmaker Zhang Lei, comes as it continues

its global expansion, with teams in London, Singapore and Tokyo

among other markets.

The official fundraising launch follows the firm's

record-setting $18 billion fundraising in 2021, Asia's largest

such exercise. The capital raised was split into three vehicles

for buyout, growth and venture investments, respectively.

Hillhouse did not respond to a Reuters request for comment.

The sources declined to be identified as the information is

confidential.

FUNDRAISING REVIVAL

A total of $25.2 billion has been raised in Asia Pacific

private equity funds as of November 20, Preqin data showed, a

significant drop from last year's annual value of $66.7 billion

and well below the all-time high of $241.2 billion in 2016.

The fundraising will be a litmus test whether investors are

signing up for Hillhouse's global ambitions at a time when

private market investors are hungrier for capital returns than

deploying new capital after years of stagnant exits.

Now, with warming capital markets allowing exits via initial

public offerings and assets in Japan and India becoming more

attractive to investors, fundraising momentum is growing.

Several global firms are ramping up efforts to raise

sizeable Asia-focused buyout funds over the next 12 to 18

months. KKR & Co ( KKR ) started raising its fifth Asia private

equity fund last week, targeting $15 billion, Reuters reported.

Blackstone has raised more than $10 billion for its

third Asia private equity fund, which has a maximum fundraising

limit of $12.9 billion, said a separate person with knowledge of

the matter. Blackstone did not immediately comment.

In July, Sweden's EQT said it expected to close

its new Asia-focused buyout fund, hitting the maximum limit of

$14.5 billion in 2026.

Mergers and acquisitions by private equity firms of Asian

targets totalled $130 billion so far this year, already

exceeding the annual amount in 2024 and the year before,

Dealogic data showed.

RETURN TO CHINA

Hillhouse gained a reputation for early investments in

Chinese tech giants including JD.com ( JD ) and Tencent

Holdings ( TCTZF ).

More recently, it struck a number of global buyout deals

including a $3.7 billion acquisition of Philips' domestic

appliances in 2021, the purchase of Australian medical

researcher George Clinic in 2023 and a $1.1 billion buyout of

Japan's Samty Holdings last year.

Hillhouse's latest fundraising comes as global investors

warm up to China after staying on the sidelines over the last

few years. Encouraged by cheaper valuations, some investors are

reducing allocations to U.S. markets and reconsidering China.

"2025 broke the U.S. dominance in private capital markets,"

said Benjamin Lohr, partner at Herbert Smith Freehills Kramer in

Hong Kong.

"We're seeing a global rebalancing, with capital

reallocating to Europe and Asia. Appetite for China is growing

again, and you can't really raise a large Asia-focused fund

without investing in China," he added.

U.S. firms, including KKR & Co ( KKR ) and Warburg Pincus,

have invested in China-focused businesses this year.

It was not immediately clear what Hillhouse's next private

equity fund, its sixth, will focus on, but the firm has

traditionally been active in technology, business services,

healthcare and consumer sectors.

Its co-chief operating officer told Reuters in March the

firm was looking to invest $1 billion to $2 billion annually in

Japan and roughly double its headcount in the country, which has

been the biggest driver in Asia private equity activity.