New China-focused hedge fund bucks trend to raise more than $100 million By Reuters

By Summer Zhen and Xie Yu

HONG KONG (Reuters) – A new China-focused hedge fund, led by a former Hillhouse Capital Management fund manager, has raised between $100 million and $150 million, marking one of the strongest launches for a China-focused fund this year.

Hong Kong-headquartered Protium Capital Ltd, a long-short equity fund, will begin trading in July. Its relatively robust start comes at a time when many funds have been slashing their exposure to the world’s second-largest economy, worried about trade and political tensions with the U.S. as well as a weaker-than-expected post-pandemic recovery.

“Opportunities often come when most people feel risk-adverse,” Protium’s founder Lu Ning told Reuters.

From a long-term perspective, China still has many high-quality companies and entrepreneurs, he said.

Billionaire Zhang Lei, the founder of Hillhouse – one of Asia’s largest alternative investment firms – has provided seed money while other investors include business owners, financial institutions and family offices from China and Asia.

The fund is expected to focus on the tech, industrial and consumer sectors.

Fundraising has been extremely difficult for China-focused funds this year, with most raising about $50 million or less, industry sources said, declining to be identified as they were not authorised to speak to media.

That’s worse than last year when most raised between $50 million and $100 million, they added.

For the first five months of 2023, Greater China-focused hedge funds posted an average loss of 2.2%, while broader Asian funds had flat returns, Eurekahedge data shows.

Lu left Hillhouse in April. Before that, he worked as head of equities at China International Capital Corp until 2020. 

Protium is in the process of selecting prime brokers and is in talks with Morgan Stanley (NYSE:), UBS and BofA Securities.

In 2022, newly launched China-focused hedge funds, excluding onshore yuan-denominated funds, raised a combined $1.7 billion, slumping 26% from a year earlier, according to With Intelligence.