Yale-backed Hillhouse Capital Management and investment holding company Tencent are partnering up.
China-based Tencent, the fourth largest internet company in the world, and Yale University-backed Hillhouse Capital Management are set to form a joint venture.
The fund’s equity will be split 60 to 40. It has not been disclosed yet which party will get which share, or how much money the two partners will provide. Qiu Guolu, who previously served as investment director of fund manager China Southern Fund Management, is to be chairman for the fund. Zhang Lei, founder of Hillhouse, meanwhile will take over as general manager.
Tencent and Hillhouse are already working together on a joint venture in Indonesia, which they set up in February 2013 alongside media company MNC Media. They are also both investors in JD.com: Hillhouse held 13% before JD.com’s flotation in May 2014, while Tencent holds a 15% stake.
Beijing-based Hillhouse was established in 2005 by Zhang Lei. The firm is named after Hillhouse Avenue, the address of Yale University’s School of Management, where he earned his MBA. Yale provided $30m via its endowment fund to Hillhouse, thanks to the connection Lei had managed to make with David Swensen, Yale’s chief investment officer who hired Lei to work in the Yale Investments Office while still a student.
Hillhouse is a shareholder in Tencent, which was the first investment the firm made with the money received from Yale.
Hillhouse’s fund is worth $13bn, and Lei maintains strong links with his alma mater. In 2010, he made the single largest donation to date to the School of Management, the peculiar amount of $8,888,888.
