AVCJ China Awards: Firm of the Year – FountainVest Partners

2013-06-26

Date: 26 Jun 2013
From: Asian Venture Capital Journal

FountainVest Partners took six months to raise its second fund, for which it also won the US dollar fundraising award, and then participated in China’s largest-ever PE buyout. CEO Frank Tang looks back and forward

Q: The fundraising process went smoothly despite a difficult environment. What were the contributing factors?

A: We have three anchor LPs and then a number of investors in Fund I are highly reputable. The fact that they decided to re-up in Fund II was great in terms of supporting momentum. By the time we reached our first close we had already surpassed the size of Fund I and that helped quite a lot in terms of finishing it off. In addition, our increase in our fund size was seen as pretty moderate.
We were about $1 billion last time and this time it was hard capped at $1.35 billion. Investors didn’t see this as aggressive and they knew our strategy would be consistent.

Q: You have been involved in a couple of buyouts recently. Are you expecting to do more and what does this mean in terms of team size and skill sets?

A: It’s limited right now, but we are seeing certain buyout situations emerging and it is likely to become a trend. In anticipation of our next phase of funds, we have been expanding the team. Our Beijing office opened about two years ago and we have been adding people across the board since then, at various levels and functions.

Q: Including the operational side…

A: We have always been looking at various ways to add value to our portfolio companies. It starts with the experienced people we recruit for these companies, depending on specific needs. We also have senior advisors engaged by the fund, and then on each project we have outside consultants. In terms of an in-house team, we are gradually building it.

Q: Can the recent spate of take-privates of US-listed Chinese companies – two of which involveFountainVest (Focus Media and LJ International) – be sustained?

A: I think it’s a wave