Wuyuan Capital Plans to Raise Approximately $600 Million Growth Fund
Sources told Bloomberg that Wuyuan Capital plans to raise approximately $600 million for a new growth fund, set to launch later this year, with a target completion date in early 2027. This fund aims to introduce a series of new entrepreneurial opportunities to investors through China-themed managers.
The firm was founded in 2008 under the name Morningside Capital by Liu Qin, Shi Jianming, and others, and was renamed in 2020 to Wuyuan Capital. Its publicly managed assets are often reported to be around $5 billion. The portfolio includes companies like Xiaomi, Kuaishou, Xpeng, SenseTime, and Pony.ai. Bloomberg previously reported that Kuaishou generated approximately $30 billion in paper returns around its IPO; Xiaomi's early positions also recorded hundreds of times returns. In 2023, it aimed to raise about $700 million for a new fund.
Wuyuan is one of the shareholders of Moonscape. Moonscape completed approximately $3.5 billion in financing in July 2026, with a valuation of $35 billion, led by the National Artificial Intelligence Industry Investment Fund. After the release of Kimi K3 with approximately 28 trillion parameters, its annual recurring revenue reached about $300 million in June, up from about $200 million in April. It is now advancing towards a pre-IPO round with a target valuation of about $50 billion, having confidentially submitted to the Hong Kong Stock Exchange, aiming to raise around $3 billion, with participation from Goldman Sachs, CICC, and Deutsche Bank, with a timeline pointing to around Q1 2027. Tencent, Meituan, and Alibaba are also on the shareholder list.
The buyers are sovereign funds, family offices, and pension funds looking to invest in Chinese AI and growth-stage projects; the sellers are Wuyuan, which is raising new funds with appreciated old positions. The driving force is the increased valuations of invested companies and the Hong Kong IPO window, rather than just the expiration of a single fund. Funds from limited partners will flow into the next round of AI and hard tech investments. Beneficiaries include early shareholders with improved paper returns who can raise more; those under pressure include other China-themed funds competing for allocations in the same window, and invested companies that still need to prove that open-source models can turn revenue into profit.
Source: Public Information
ABAB AI Insight
The $600 million growth fund aims to capitalize on the time difference: the valuations of model companies have jumped from billions to hundreds of billions, making old shareholders' books look better, which encourages limited partners to lock in the next investment with the same manager. Wuyuan's historical advantage lies in the IPOs of consumer and mobility sectors, and this round aims to leverage the same credibility in laboratories focused on computational power. A growth fund means larger checks and later rounds, no longer just focusing on seed stories.
The capital path is "expected IPO of invested companies → fundraising by managers → reinvesting in the next batch." Moonscape's $3.5 billion round, aiming for $50 billion and a Hong Kong listing, brings together national industrial funds, internet giants, and USD/RMB accounts into the same capital table. Open-source weights lead to developer diffusion, with revenue rising from $200 million to $300 million in annual recurring income, using benchmarks against Anthropic and OpenAI, rather than profit margins. The approximately $30 billion level return from Kuaishou serves as a reference for this roadshow.
Comparing to Sequoia China and Hillhouse raising growth funds at the end of the mobile internet cycle: both open the next pocket as flagship projects approach IPO. The difference is that AI open-source models may still incur huge losses, with peers like Zhipu already showing examples of simultaneous revenue and loss amplification. The industry phase shifts from "extending the life of model companies" to "managing exit expectations for old shareholders."
The structural change is capital concentration. Concentration occurs among a few RMB/USD dual-currency managers who can simultaneously present exits from consumer internet and new AI positions. The mechanism is: once the IPO window opens, paper multiples become fundraising materials; the raised growth amounts further elevate the pricing for the next round. Money flows from model rounds to the fund level, and then to the next wave of companies that have not yet gone public, with the premise that the Hong Kong market can absorb this batch of valuations.
ABAB News · Cognitive Laws
- The valuation of invested companies first becomes the fundraising material for managers.
- The emergence of growth funds indicates that checks have shifted from stories to multiples.
- Open-source changes rankings, and only listings convert rankings into cash.