Hillhouse targets US$7bn fund as global investors return to Asia

Hillhouse Investment has quietly kicked off fundraising for a new private equity vehicle targeting US$7 billion, according to people familiar with the matter. The move is being watched as a barometer of renewed demand for large Asia-focused buyout pools after several years of investor caution.

The firm, founded by China-born dealmaker Zhang Lei, has been expanding its footprint outside Greater China with teams in London, Singapore and Tokyo. That global reach underpins its pitch to limited partners: a mix of buyout, growth and cross-border opportunities across the region.

This fundraising will test whether allocators are prepared to back big Asia funds again. Industry data show the region has lagged: Preqin reports only US$25.2 billion raised by Asia-Pacific private equity funds so far this year, down from last year and far below the peak liquidity years earlier in the decade. Yet deal activity is recovering — and managers with strong track records are finding pockets of demand.

Hillhouse’s new effort follows its headline-grabbing US$18 billion raise in 2021, an exercise that was split across buyout, growth and venture vehicles. The firm is known for early backing of Chinese technology names such as JD.com and Tencent, and for later global buyouts including the US$3.7 billion acquisition of Philips’ domestic appliances business and a roughly US$1.1 billion purchase of a Japanese target.

Global competitors are also re-engaging the market. Sources say KKR has started marketing an Asia private equity fund targeting about US$15 billion, while Blackstone has amassed over US$10 billion for its third Asia PE vehicle. Sweden’s EQT Group is close to fully raising an Asia buyout fund with a cap around US$14.5 billion. Together with activity from managers such as Warburg Pincus, the trend points to bigger pools of capital chasing regional deals.

Market implications are twofold. First, re-opened exit channels — including IPO windows and cross-border sales — are making investors more willing to commit. Second, capital is shifting geographically: Japan, India and parts of Southeast Asia now attract larger allocations as multinationals and funds chase diversification and higher yields. For Hillhouse, a successful close would validate its global strategy and support planned deployments across sectors including technology, healthcare and consumer.