RRJ Said to Target $4 Billion as Asia Buyout Funds Grow

RRJ Capital Ltd. (RRJCAZ) and CDH Investments Fund Management Co. (CDGUVZ) are seeking to top the size of their previous Asia private-equity funds as they begin new efforts to raise capital, according to potential investors.

RRJ Capital, led by former Goldman Sachs Group Inc. (GS) executive Richard Ong, will seek $4 billion for a fund that would be one of the largest focused on Asia, said two prospective clients, who asked not to be named because the fundraising hasn’t been publicly announced. Beijing-based CDH plans to seek $2 billion for its next China fund, at least a third more than its predecessor, said two other investors.

KKR & Co. (KKR) and TPG Capital are among private-equity managers amassing multibillion dollar funds as firms compete to capitalize on Asia’s growth. KKR, based in New York, is seeking as much as $6 billion and TPG Capital in Fort Worth, Texas, wants as much as $5 billion. Fifty-three pan-Asia funds are attempting to raise a total of $22.3 billion to invest exclusively in the region, according to data from Preqin Ltd., a London-based research firm.

There are 407 funds focused, like RRJ, primarily on the region that are targeting $149 billion, Preqin’s data show. Of those, 272 funds seeking $90.2 billion are based in Asia.

RRJ Capital, based in Hong Kong and Singapore, raised $2.3 billion (HK$17.9 billion) for its debut fund established in March 2011. That fund is about 60 percent invested, one investors said, with stakes in Chinese diaper maker AAB Commodities Co. (ABVZVZ)and Clean Energy Fuels Corp. (CLNE), a U.S.-based provider of natural-gas fuel for transportation.

RRJ’s Team

RRJ Capital will start gathering the next fund in the second half of the year, the investors said.

The firm’s 20-person team has 13 investment professionals, one of the prospective clients said. They include Richard’s brother, Charles Ong, who left his post in January as senior managing director of special projects at Temasek Holdings Pte. (TMSK), Singapore’s sovereign-wealth fund.

The second RRJ Capital fund will be split evenly between traditional private-equity assets and more liquid deals such as private investments in public equities, or PIPEs, the people said. It will target opportunities in China and Southeast Asia, one of them said.

Last year, RRJ joined with a group including Temasek to purchase Frac Tech Holdings LLC, a Fort Worth-based hydraulic- fracturing services company.

Marketing Plans

Richard Ong, who worked as Goldman Sachs’s co-head of Asia investment bank, left in 2008 to join Hopu Investment Management Co., a fund set up by Fang Fenglei, who ran Goldman Sachs’s Chinese securities venture. Ong departed the firm to start RRJ Capital early last year.

CDH is seeking more than the $1.46 billion its prior fund, CDH Fund IV, raised in the first half of 2010. The firm will start officially marketing the fund in the second half of the year. It may raise as much as $2.5 billion, one investor said.

CDH Fund IV was generating a multiple of 0.9 times invested capital and a negative 11.5 percent internal rate of return as of Sept. 30, according to performance data from Washington State Investment Board, an investor. This fund invests $50 million to $200 million in both state-owned and privately owned enterprises in China, according to minutes from a 2010 meeting of the pension board.

The firm, formed in 2002, manages more than $7 billion from about 100 institutional investors. CDH focuses on private equity, venture capital, real estate and public equity. The private-equity division manages more than $4 billion in assets and has invested in about 50 portfolio companies, according to its website.

A spokesman for CDH declined to comment on fundraising plans. A telephone call to RRJ’s Hong Kong office wasn’t immediately returned.

To contact the reporter on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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