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Hillhouse Capital Group

Manages capital for institutional clients such as university endowments, foundations, sovereign wealth funds, pension funds, and family offices and is known for its avoidance of publicity
Hillhouse Capital Group
Leadership team

Lei Zhang (Founder and CEO)

Zhang Lei  (Co-Founder and CEO )

David Zhang (Managing Director)

Lei Sun (Managing Director )

James Sun  (Managing Director)

Number of Employees
100 - 500
Headquarters
Beijing, China
Established
2005
Social Media
Summary

Hillhouse Capital Group is a prominent Chinese-based investment group that engages in investments across various markets, both within and outside of China. Established in 2005, Hillhouse initially concentrated on smaller venture-style investments exclusively in China. However, as the fund has grown into a multi-billion dollar entity, it has expanded its investment scope to include buyouts and companies located beyond the region.

Hillhouse Capital adopts a long-term and patient investment approach and collaborates closely with management teams. The group invests in a wide range of sectors, with a particular emphasis on consumer, technology, media, telecommunications (TMT), industrials, and healthcare sectors. Hillhouse has an impressive track record, having invested in and worked with globally recognized companies such as Airbnb, Didi, Tencent, and Uber.

In terms of investment strategies, Hillhouse Capital engages in various deal types, including seed capital, early and growth-stage ventures, late-stage investments and IPOs, listed equities, acquisitions and leveraged buyouts (LBOs), venture debt, structured capital, special or distressed situations, as well as hedge strategies and fund investments.


History

Hillhouse Capital Group, founded in 2005, is a Chinese-based investment group that has gained prominence as a leading global private equity firm. The firm was established by Lei Zhang, who remains its key figure and CEO. Initially, Hillhouse focused on smaller, venture-style investments exclusively within China. However, as the firm grew into a multi-billion dollar fund, its investment mandate expanded to include buyouts and companies located outside the region.

One of the notable aspects of Hillhouse's early history is its connection to the Yale University endowment. Lei Zhang secured an initial seed capital investment of $20 million from the endowment, which was managed by renowned investor David Swensen at the time. This connection with Yale's endowment provided a solid foundation for Hillhouse's growth and helped establish its reputation in the investment industry.

In the following years, Hillhouse Capital Group experienced rapid expansion and success. The firm developed a strong track record of investments and demonstrated its ability to generate significant returns. Hillhouse became known for its long-term, patient investment approach and its emphasis on partnering with management teams. The firm's investment philosophy centres around conducting deep fundamental research and taking a value-oriented approach to equity investments.

Over time, Hillhouse expanded its geographic focus beyond China. The firm began investing in companies across East Asia, Southeast Asia, North America, and Europe. This expansion broadened its reach and allowed Hillhouse to tap into diverse investment opportunities in different regions.

Hillhouse Capital Group has invested in a wide range of sectors, with a particular focus on the consumer, technology, media, telecommunications (TMT), industrials, and healthcare. The firm has worked with some of the most iconic companies globally, including Airbnb, Didi, Tencent, and Uber.

As of the available information up until September 2021, Hillhouse managed assets worth $30 billion. The firm's success and strong performance have contributed to its growth and stature as a major player in the private equity industry.

It's important to note that Hillhouse Capital Group's history is continually evolving as it engages in new investments, expands its portfolio, and adapts to market trends. The information provided here is based on the available data up until September 2021, and there may have been developments or changes since then.


Investment criteria

Hillhouse Capital Group has established a set of investment criteria that guide its decision-making process. The firm carefully evaluates potential investment opportunities based on several key factors to ensure alignment with its investment philosophy and to maximize the potential for long-term value creation. While the specific criteria may vary depending on the investment situation, the following elements generally reflect Hillhouse's investment approach:

  • Industry and Market Potential: Hillhouse seeks industries with strong growth potential and favourable market dynamics. The firm focuses on sectors such as technology, consumer, healthcare, financial services, and industrials. Hillhouse aims to identify companies that operate in attractive markets with the potential for sustainable long-term growth.
  • Quality of Management: Hillhouse places great emphasis on partnering with exceptional management teams. The firm seeks companies led by talented and visionary executives who demonstrate a deep understanding of their industry and possess a track record of successful execution. Hillhouse believes that strong leadership is critical to driving growth and creating value.
  • Competitive Positioning: Hillhouse evaluates a company's competitive advantage within its industry. The firm looks for businesses with a unique value proposition, a differentiated product or service offering, and a strong market position. Hillhouse aims to invest in companies that have the potential to capture a significant share of their target markets and maintain a competitive edge.
  • Growth and Expansion Potential: Hillhouse seeks investments in companies with substantial growth potential. This includes identifying opportunities for organic growth through market expansion, product innovation, or operational improvement. Additionally, the firm considers investments in companies with the potential for strategic acquisitions or partnerships that can further enhance growth prospects.
  • Financial Performance and Fundamentals: Hillhouse evaluates the financial performance and fundamentals of a company to assess its investment viability. The firm looks for companies with a strong financial track record, sustainable revenue growth, healthy profit margins, and efficient capital allocation. Hillhouse aims to invest in companies with solid fundamentals that can generate attractive returns over the long term.
  • Alignment with Hillhouse's Values: Hillhouse seeks to partner with companies that share its commitment to sustainable and responsible business practices. The firm considers environmental, social, and governance (ESG) factors in its investment decision-making process and looks for companies that prioritize ethical conduct, corporate governance, and stakeholder engagement.

Values

Hillhouse Capital Group is guided by a set of core values that underpin its investment philosophy, decision-making process, and overall approach to business. These values reflect the firm's commitment to excellence, integrity, long-term partnership, and responsible investing. Here are the key values that define Hillhouse:

  • Excellence: Hillhouse strives for excellence in all aspects of its operations. The firm maintains a rigorous and disciplined approach to investment analysis and due diligence, aiming to identify exceptional investment opportunities. Hillhouse seeks to partner with outstanding management teams, supports continuous learning and improvement, and fosters a culture of excellence across its organization.
  • Integrity: Integrity is fundamental to Hillhouse's business practices. The firm places great emphasis on ethical conduct, transparency, and accountability. Hillhouse operates with the highest standards of professionalism, treating its partners, employees, and stakeholders with honesty and respect. Upholding integrity is essential to building trust and long-lasting relationships.
  • Long-Term Partnership: Hillhouse values long-term relationships with its portfolio companies, investors, and other stakeholders. The firm takes a patient and collaborative approach, understanding that sustainable value creation often requires time and ongoing support. Hillhouse seeks to establish partnerships based on trust, shared goals, and mutual respect, working closely with its partners to navigate challenges and achieve long-term success.
  • Responsible Investing: Hillhouse is committed to responsible investing and considers environmental, social, and governance (ESG) factors in its investment decision-making process. The firm recognizes that integrating sustainability and responsible practices can contribute to long-term value creation and positive societal impact. Hillhouse aims to invest in companies that prioritize sustainable business practices, corporate governance, and the well-being of their stakeholders.
  • Entrepreneurial Spirit: Hillhouse embraces an entrepreneurial spirit and a willingness to think differently. The firm encourages innovation, creativity, and an open-minded approach to problem-solving. Hillhouse values entrepreneurial leaders and supports their vision and ambition, aiming to create an environment that fosters entrepreneurship and drives innovation within its portfolio of companies.
  • Global Perspective: Hillhouse is a global firm with a deep understanding of local markets and a broad international perspective. The firm leverages its expertise and network across East Asia, Southeast Asia, North America, and Europe to identify investment opportunities and support portfolio companies in their global expansion efforts. Hillhouse recognizes the value of diverse perspectives and cross-cultural collaboration in driving success.

 


Mission

Hillhouse Capital Group's mission is to generate long-term value by identifying and investing in exceptional companies and partnering with outstanding management teams. The firm seeks to be a catalyst for growth and innovation, driving positive change and creating sustainable impact in the industries and markets in which it operates.


Portfolio

Hillhouse Capital manages a diverse and extensive portfolio of investments spanning multiple sectors and regions. The firm focuses on both private equity and venture capital investments, targeting companies at different stages of growth. With a strong emphasis on identifying high-potential opportunities, Hillhouse Capital has built a portfolio that reflects its strategic investment approach and industry expertise. The portfolio of Hillhouse Capital comprises companies across various industries, including technology, e-commerce, healthcare, logistics, consumer goods, and more. Some notable companies in Hillhouse's portfolio include:

  • CATL: Hillhouse has invested in Contemporary Amperex Technology Co. Limited (CATL), a leading global manufacturer of lithium-ion batteries for electric vehicles. CATL is known for its cutting-edge battery technology and has become a key player in the rapidly growing electric vehicle market.
  • Meituan: Hillhouse has invested in Meituan, a Chinese e-commerce platform that offers a wide range of services, including food delivery, hotel booking, and ride-hailing. Meituan has experienced significant growth and has become one of the largest online service platforms in China.
  • Airbnb: Hillhouse has made an investment in Airbnb, a global online marketplace for vacation rentals and accommodations. Airbnb has disrupted the traditional hospitality industry and has become a popular choice for travellers around the world.
  • JD.com: Hillhouse has invested in JD.com, one of China's largest e-commerce companies. JD.com operates a comprehensive online retail platform and is known for its extensive logistics network, providing fast and reliable delivery services.
  • BeiGene: Hillhouse has invested in BeiGene, a biopharmaceutical company focused on developing innovative cancer treatments. BeiGene has a robust pipeline of oncology drugs and has made significant advancements in the field of precision medicine.
  • JD Health: Hillhouse has made investments in JD Health, the healthcare subsidiary of JD.com. JD Health provides a wide range of online healthcare services, including telemedicine, pharmacy services, and health management.

In addition to these notable investments, Hillhouse Capital's portfolio includes a diverse range of companies that demonstrate strong growth potential, technological innovation, and market leadership. The firm actively seeks investment opportunities in emerging sectors and geographies, contributing to the development of innovative businesses and industries.


References
Hillhouse Capital Group
Leadership team

Lei Zhang (Founder and CEO)

Zhang Lei  (Co-Founder and CEO )

David Zhang (Managing Director)

Lei Sun (Managing Director )

James Sun  (Managing Director)

Number of Employees
100 - 500
Headquarters
Beijing, China
Established
2005
Social Media