In 2021, as Chinese regulators aggressively reshaped the landscape for the country’s leading technology companies, a sense of apprehension gripped chief executives. Yet, amidst the uncertainty, one CEO stood out for his unwavering confidence in the country’s ability to adapt: the head of Primavera Capital, Fred Hu. Dismissing concerns, Hu confidently asserted that the government’s quest for “common prosperity” was laudable and need not signal a weakening commitment to a robust private sector in China.

By that point, Primavera Capital had already solidified its position as one of the country’s leading investment firms. The firm had provided crucial financing to prominent Chinese internet firms, like ByteDance and the Ant Group. The Hong Kong-based firm had even ventured in the U.S. education market, by acquiring Tutor.com and Princeton Review, the New York-based college test prep firm.

At The Wire, we periodically showcase large or fast-growing investment firms in China. Thus far, we’ve looked at Qiming Venture Partners, Xiaomi-linked Shunwei Capital, Huawei’s in-house VC fund, Yunfeng Capital and Hillhouse Capital. This week, meet Primavera Capital.

PRIMAVERA’S MANAGEMENT TEAM

Primavera Capital was established in 2010 by Fred Hu, a Harvard trained economist and longtime Goldman Sachs investment banker. Hu played a pivotal role in bolstering Goldman’s presence in the country, earning a reputation as a prominent economist in the process. In fact, reports from China’s state-run news media indicated that Hu had even been considered for the position of deputy governor at the country’s central bank, underscoring his standing within financial circles.

“Even if Fred Hu has superhuman abilities, cutting a bloody path into a domestic private equity industry already filled with gun smoke is not necessarily very easy,” said a commentator in Economic Observer. Just over a decade later, however, Primavera Capital is one of the nation’s top private equity firms, according to Private Equity International, part of the London based PEI Group.

One of Primavera’s founding partners, Haitao Zhai, leads the firm’s investments in the financial services sector. Some of the deals that Zhai has led or assisted with include investments in China AMC, Postal Savings Bank of China, OASIS Hospital, and Hisense Broadband. Fellow Goldman Sachs alumnus William Wang Yang also helped co-found Primavera, and now serves as a director of another portfolio company: Sunlands Technology Group, which provides online professional education services in China.

PRIMAVERA’S LIMITED PARTNERS

Primavera has 13 limited partners in the United States, along with one in Taiwan and another in Sweden. Many of these limited partners are pension funds, including the New York State Teachers’ Retirement System and General Electric Pension Trust. This highlights a state of affairs that has prompted the U.S. government to proceed cautiously in implementing an outbound investment screening mechanism targeting China. In March, Commerce Secretary Gina Raimondo told Bloomberg News that the proposal was “complicated” because many U.S. pension firms have invested Americans’ retirement money in China.

Below is a list of some of Primavera Capital’s limited partners:

MAJOR INVESTMENTS

Since 2010, Primavera Capital has invested in more than 100 companies, including some of China’s leading technology firms. For example, Primavera provided capital to ByteDance, which in 2018 was crowned the world’s most valuable Internet startup, following the completion of a $3 billion funding round. Another noteworthy addition to Primavera’s investment roster is Kuaishou, a prominent short-video platform. The company achieved a significant milestone in February 2021 when it became the first app-based company of its kind to go public on the Hong Kong Stock Exchange.

In 2016, Primavera Capital joined Ant Group in investing $460 million in Yum China, the China unit of Yum Brands Inc, which owns KFC and Pizza Hut. Yum China also runs Chinese fast-food chain First East Dawning and the hotpot restaurant Little Sheep.

Below are some of the firm’s most notable deals:

ONE INVESTMENT: SPRING EDUCATION GROUP

Primavera Capital’s interest in private education assets was highlighted by its investment in the Spring Education Group, a sprawling network of more than 230 schools in 19 U.S. states as well as parts of Asia, offering K through 12 education and, in some cases, bilingual Mandarin programs. Among its notable deals was the purchases of Stratford Schools and Nobel Learning Communities. Primavera Capital combined those entities into a newly formed company known as Spring Education Group.

Primavera Capital has expanded its education portfolio through recent acquisitions of Tutor.com and The Princeton Review, solidifying its presence in the sector. However, the deals have not escaped scrutiny amidst growing concerns about Chinese investments in the United States. Tutor.com, for instance, is an online tutoring business that offers services to the military. (The websites of Tutor.com and The Princeton Review both say that they are now owned by Primavera Capital.) And recently, some critics have raised alarms about the risks of firms affiliated with China being engaged in such a business.

Last January, for instance, Representative Mike Waltz, a Florida Republican, called for a Pentagon audit to determine whether private educational services to military personnel were linked to China and could be influenced by the Chinese Communist Party at a time of heightened tensions between the U.S. and China. (Rep. Waltz did not mention Primavera or its U.S. deals in the statement he issued in January.)

A spokesperson for Primavera says the firm secured all the necessary regulatory approvals for its education investments in the U.S., including the deals to acquire The Princeton Review and Tutor.com “No student or school data is shared with Primavera, and Primavera does not have access to Tutor.com/The Princeton Review internal systems,” Primavera said in a statement released to The Wire.

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