China’s PE Trailblazer Hopu Faces Doubts on Returns, Succession

For years, Fang Fenglei was Wall Street’s top fixer in China; Goldman Sachs Group Inc., which has built one of Asia’s most prominent private equity firms. He was a partner of heavyweights such as.

Now, following mediocre returns, suppressed deals and loss of leadership at Hopu Investment Management Corp., Temasek Holdings Pte, GIC Pte and China Investment Corp., according to people familiar with the matter. Even long-time supporters such as are rethinking their commitments.

As Hopu prepares to raise $1.5 billion to $2 billion for a new fund in 2026 under the management of Fang’s hand-picked successor – his son-in-law Gunther Hamm – the firm has become a tangible example of the challenges that private equity shops led by Asia’s founder face in an extremely challenging environment for fundraising. The days of China’s abundance of capital and excessive profits are gone, and its aging rainmakers are handing over the reins to younger leaders, with mixed results.

“When leadership changes, investors get nervous,” said Hong Kong businessman Richard Li, an investor in a small Hopu growth fund run by Hamm. This is not the first time Fang has overcome difficulties, and it will be important for Hopu to raise fresh capital from other top-notch investors, Li said. The Hong Kong billionaire said he hasn’t decided whether to invest in the firm’s next fund.

Hopu last closed its third US dollar fund in 2018 after raising $2.63 billion. Mediocre returns from that vehicle and the fund before it, and the departure of some of the firm’s senior leaders and former partners, have made some investors wary, said the people, who asked not to be named discussing private information. The sources also said that Hopu has not made any significant new investments since mid-2022.

Many global asset allocators have reduced their exposure to China amid concerns about slowing economic growth and rising geopolitical risks. Some are still trying to recoup losses from investments China made years ago. Many private equity investors in Asia have stated that they will not give up new capital until they get money back from old funds.

A consummate power broker, Fang, now 73, is known for a relationship-based style rooted in China’s business and political networks. Nearly three decades ago, he helped found the investment bank China International Capital Corp., of which Morgan Stanley was a founding investor. In 2004, Fang helped Goldman Sachs establish a China securities venture that he oversaw as chairman. He founded Hopu in 2007, and the company quickly raised $2.5 billion for its first fund from Goldman, some of the Wall Street firm’s partners, Temasek and other foreign investors.

Hamm, a 45-year-old American, has a more direct, Western-style approach to management and deal-making that has troubled some Hopu veterans, according to people familiar with the company’s internal dynamics.

Hamm, a former investment banking analyst at JPMorgan Chase & Co., moved to China in 2007 and joined CDH Investments Fund Management Co., a local private equity firm, in 2010 on Fang’s recommendation.

He then worked at Hillhouse Investment Management Ltd. for just over a year before joining Hopu in 2017. Hamm quickly rose through the firm’s ranks, becoming a partner in 2021 and co-president in 2023. The executive who shared that role resigned in May 2025, leaving Hamm as sole chairman and leaving Hopu at the end of the year, according to sources familiar with the firm.

Hamm’s rapid rise increased tension in Hopu. Some staff question whether he can revive morale and make lucrative deals given his limited local ties compared to previous senior leaders, sources said.

In an interview with Bloomberg News, Hamm said the firm has been “laser focused on the performance of the business and making money from its investment portfolio” for the past few years. “Returning capital efficiently to our investors is the best indicator of that, and people want to see that,” he added.

Fang said in a separate interview that he had no intention of retiring and that Hopu investors called him the firm’s “super key man.” He said he believes that nurturing and promoting talent from within the firm is better than hiring top managers from outside because it encourages greater loyalty and stability.

Fang also said it’s a good thing Hopu hasn’t made any significant new investments in the past few years because markets have been highly volatile. “Under these circumstances, not investing is the best investment,” he said, adding that it helped the firm avoid losses from sectors such as Chinese tutoring and internet platform companies.

Hamm said the big priority in 2025 is returning money to investors in Hopu’s existing funds. Private equity funds typically have a lifespan of seven to 10 years; They distribute cash during the first few years and return capital when they exit investments, usually starting in the sixth year.

Hopu’s 2018 flagship fund, known as Fund III, distributed just over $2 billion after deducting a total of $356 million in fees and expenses, according to an internal document seen by Bloomberg News. By March 2025, it had generated about 1.25 times its capital and returned 17% of investors’ money, according to Bloomberg calculations based on figures in the document.

The company has since increased the pace of distribution. A letter published in November stated that Fund III investors will have recovered 66% of their investment by the end of 2025, thanks to distributions of approximately $1 billion throughout the year. The fund’s net multiple on invested capital rose 1.5 times in the third quarter, according to a person familiar with the matter.

Recent gains in the stock market have helped this. The firm sold some of its shares in insurance company FWD Group Holdings Ltd., which went public in Hong Kong in July. Hamm said some cash also came from a profitable investment in French veterinary medicines and vaccines manufacturer Ceva Animal Health, which was partly transferred into a new follow-on fund vehicle.

As of March, about half of the 21 investments in Fund III’s portfolio were flat or underwater, according to the internal document. Ceva and FWD, an investment led by Hamm, have been his most profitable bets.

Hopu rotated among senior leaders. Apart from Fang, the original managers of the top three flagship funds also left, according to familiar sources.

The firm has largely focused on technology, logistics, consumer and financial services deals in China. Hopu’s 2014 investment in warehouse operator Global Logistics Properties, where he led a $2.5 billion consortium that included Chinese state-owned enterprises, was his defining achievement. GLP China is preparing to go public in 2026, according to the firm’s latest investor letter.

But the performance of Hopu’s second flagship fund, which closed in 2014, was less impressive. As of March 2025, Fund II provided a modest 1.19 times $1.8 billion in invested capital, including fees, according to Bloomberg calculations based on figures in an internal document. The company returned more than 60% of investors’ cash after turning a profit on 12 of its 19 investments, according to the document.

A $310 million investment in New Age African Global Energy Ltd., an oil and gas company from which the fund was largely written off, hurt the fund’s performance, according to the document. Hopu’s Fund III also invested $50 million in New Age.

One of the original managers of Fund III was Temasek alumnus Lau Teck Sien. Lau was also Hopu’s chief investment officer, but he disagreed with Fang on the timing of investment exits and stepped aside, according to people familiar with the matter. In 2018, Fang hired Lee Zhang, former Asia president of Deutsche Bank AG and former senior executive of Industrial and Commercial Bank of China Ltd., with Zhang Hopu as co-chairman.

Friction escalated when Lau and another Hopu partner, Cliff Chau, a former CIC chief executive, explored creating a separate pool of joint capital for Fang to invest from Beijing, rather than distributing clients’ money in ways that could affect the performance of Hopu’s flagship vehicles, people familiar said.

Sources said Fang backed down and tried to pressure Lau and Chau to sign documents that would transfer management control to him in 2021. The pair later told staff during a conference call that Fang would be removed from the decision-making process to protect the fund, sources familiar added.

The internal dispute was eventually resolved privately. After years of tension, Lau and Chau left Hopu in 2023. That year, Chinese authorities launched a corruption investigation into Zhang in connection with his time at ICBC. He was tried in 2024 and subsequently sentenced to death with a two-year suspension that could commute the sentence to life in prison.

With the top leaders gone, Hamm took full control to direct Hopu.

The firm’s investment team, which numbered 49 people at the end of 2021, has shrunk by about half as Hopu moves away from venture capital and other strategies and focuses on buyouts through its main fund. According to sources familiar with the matter, all general managers on this team have either resigned or been dismissed in the last two years.

According to the firm, the investment team has grown to 36 people after 11 hires in 2025. Hopu said the overall headcount is 80, which is close to the level it was a few years ago. Many of the recent additions were young hires, people familiar said.

When there is new leadership, “you’re always going to be trying to add people, and inevitably there will be some people who are asked to leave or choose to leave. I don’t see that as a problem per se,” Hamm said. Several younger partners he has hired since 2023 have helped fill the gap left by the old guard; three of them were responsible for finance, operations and compliance.

People who worked closely with Hamm said he was hard-working, meticulous and worked long hours, sometimes doing portfolio reviews on weekends. According to sources, junior staffers routinely prepare client meeting scripts for him that include greetings, data points, summaries and negotiation lines in short and long formats. At a client meeting a few years ago, Hamm introduced himself as Fang’s son-in-law, which struck the investor as odd, according to this person.

Hopu is pitching its next flagship vehicle, called Fund IV, as an Asian fund that includes China rather than a China-focused private equity fund. The company also plans to establish its headquarters in Singapore and is awaiting licensing approval from the city-state’s financial regulator, according to the investor letter.

Close to 100 people attended Hopu’s annual meeting in Hong Kong in mid-November, including potential investors not currently in his funds, Hamm said. Fang also performed at the event, and the two men talked about how the firm could attract more overseas investment, buy assets from multinationals in China and take controlling stakes in companies.

Hamm said the founder is “extremely engaged” with the firm, its investors and the companies in which Hopu invests. “Our president is still a great resource for us.”

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