The Blackpine Private Equity Partners Fund has successfully attained its initial close with assets of $80 million, on its way to a target size of $250 million. It plans to reach that figure with the participation of US and European institutions.
That number breaks down to $30 million from partners, $40 million from Shikumen investors and $10 million from other third-party money. The investment period is three years, with a five-year term and two one-year extensions. The management fee is 2% and performance fee is 20%, with a 9% preferred return (i.e. hurdle).
The fund looks at late-stage growth deals in Greater China, as well as looking to pick up secondary investments from busted LPs who want to divest from holdings. It has just signed the term sheet for its first investment, a $40 million investment in a subsidiary of a large Hong Kong-based firm. It plans to fit in a mid-market niche of deals worth $10-$100 million, and so avoid the investments targeted by the bigger private-equity funds.
The Blackpine team includes CIO Lawrence Chu and CFO Ulric Leung (who was the ex CFO at Sail Advisors).
“It’s true that there are more LPs entering the Greater China market,” says Leung. “However, we will address that by not following the crowd who are participating in auction deals or bank deals, where valuations are becoming expensive.
"We plan to generate our own proprietary deal flow, sourced from the network of entrepreneurs we know. We don’t think we will be competing with the RMB private-equity funds.”
The new fund is entirely focused on illiquids, with the team’s experience in managing those types of deals coming from their previous product. Shikumen started out in 2007 with the Shikumen Special Situations Fund, a hybrid hedge fund that continues to operate with $60 million in assets run by Nelson Tang, formerly of PMA. Shikumen Capital merged with Crosby Asset Management in 2010.