Hillhouse Reaches $2B Close on First Asia Real Estate Fund with $300M Boost From CPPIB

Canada’s CPP Investments (CPPIB) revealed earlier this month that it had committed $300 million to Hillhouse Capital Group’s inaugural real estate fund during the quarter ending 30 June, with that vehicle having now reached a final close at over $2 billion in equity and begun closing deals, Mingtiandi has come to understand.

Led by former Warburg Pincus executive Joseph Gagnon, who is now a partner at Hillhouse’s New Infrastructure division, Hillhouse Real Asset Opportunities Fund (RAOF) is targeting investments in new economy-related property assets and platforms across Asia Pacific with the Hillhouse team having closed its fund raising shortly after the end of the second quarter.

Records from the Cayman Islands show that the fund was first registered there on 16 June 2021 with a separate feeder vehicle set up one week later. Reuters had reported plans for the fund in March of last year, while representatives of Hillhouse, which was founded in 2005 by former Yale investment officer Zhang Lei, declined to comment on the fund raising when contacted by Mingtiandi.

In addition to the commingled fund, public filings indicate potential sidecar investments or special mandates, although no further information on these ancillary vehicles was available at the time of publication.

Sheds and Hospital Beds

The first investments under Hillhouse’s RAOF fund are said to be in the logistics sector, with the vehicle also targeting life sciences assets and other investments receiving a boost from tech-enabled tenants.

During his time at Warburg Pincus, Gagnon specialised in platform investments, and was involved in establishing e-Shang, one of the predecessors of ESR, as well as D&J, one of the forerunners of mainland industrial platform DNE Group among other deals. The Hillhouse vehicle is also said to be backing platform investments and local entrepreneurs.

Headquartered in Singapore, the fund and its leadership team are targeting investments in North Asia, including mainland China, Southeast Asia and other parts of the region.

Asia’s Biggest Investor

Before setting up its first property fund, Hillhouse had backed the $11.6 billion privatisation of GLP in 2017 and last year, together with Warburg Pincus, led a $700 million investment in JD.com’s JD Property spin-off.

Founded by Zhang Lei in 2005 with seed capital from the Yale University Endowment, Hillhouse has been active across sectors including buying Philips Domestic Appliances from its Dutch parent firm last year in a $4.4 billion deal.

The firm had a reported $73.3 billion in assets under management as of 31 July last year and with completion of its $18 billion fifth flagship buyout fund last year, manages Asia’s largest private equity vehicle.

The company was an early investor in Tencent Holdings and one of the first backers of e-commerce giant JD.com.