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Top Chinese venture capital firm Hillhouse beats back lay-off rumours after portfolio hit by plunging tech stocks

  • Hillhouse Capital has denied it is undergoing large-scale lay-offs after facing earlier rumours this year about its portfolio amid a tech stock sell-off
  • The firm is one of the biggest financiers in China’s tech sector, having made early investments in Tencent, Meituan and JD.com

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Hillhouse Capital, one of the biggest investors in China’s technology sector, is battling rumours of lay-offs after a market rout that has hit Chinese tech giants in its portfolio. Photo: Handout
Xinmei Shen
China’s top private equity firm Hillhouse Capital, a major investor behind Big Tech firms like Tencent Holdings and Meituan, denied rumours of large-scale lay-offs on Wednesday amid a slowing economy and tougher fundraising climate for domestic start-ups and venture capital (VC) firms.
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Screenshots circulating on Chinese social media platforms on Wednesday claimed that Hillhouse had laid off staff across several teams, which the investor promptly denied in a one-line statement, calling it untrue gossip.

The denial comes as Hillhouse’s portfolio has fallen in value this year. Among its major holdings, biotechnology stock I-Mab has plunged 80 per cent, Singapore-based tech firm Sea has declined 64 per cent and Chinese e-commerce giant JD.com’s value has dropped 18 per cent since the beginning of this year.

Hillhouse, founded by Yale graduate Zhang Lei in 2005, has become an investment juggernaut since its early investments in some of China’s biggest tech firms. It has since become one of the biggest financiers in the industry.

However, a series of regulatory crackdowns on China’s tech sector that kicked off at the end of 2020 brought about a sea change for VC investors. While Hillhouse has no legal obligation to reveal its portfolio performance, it was forced to deny a rumour in March that it had lost more than US$30 billion during the US-traded Chinese stock sell-off this year.

Last August, Hillhouse denied a rumour that Zhang was barred from leaving China. The firm reported the matter to Beijing police, which concluded that the rumour was “fabricated”.

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In addition to the regulatory crackdowns, the Covid-19 pandemic and geopolitical frictions – especially the US-China tech war – have pushed the tech industry into a lower-growth era. VC investors and start-ups have subsequently faced mounting difficulties in raising money.
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