New Horizon Capital, whose co-founders include Wen Yunsong, son of Chinese Premier Wen Jiabao, aims to raise a $1 billion private equity fund for investment in domestic industry leaders ready to make initial public share offerings.

This would be the third and largest private equity fund for New Horizon Capital, which had about $500 million under management since it was established in 2007, according to sources with direct knowledge of the matter.

New Horizon Capital recently completed raising between $600 million and $700 million for its latest fund by the 'first-closing' period, with capital commitments from investors including Japan's Softbank Corp and Singapore's state investor Temasek Holdings, the sources said.

New Horizon Capital started pitching the fund as early as 2008. It encountered fundraising difficulties as a result of the financial crisis, and so suspended the fund until early 2009, the sources said.

'That was very tough time, but now people are willing to pour money into the fund again since China is still the focus worldwide,' said a source.

Softbank, run by influential Japanese business tycoon Masayoshi Son, and Temasek Holdings were long-time investors since the firm launched its first fund in 2007, the source said.

The sources declined to be identified because of the sensitive nature of Wen's family background. A representative for New Horizon Capital could not be immediately reached for comment.

Back from the US

Wen Yunsong, also known as Winston Wen, helped form New Horizon Capital in 2005, a few years after graduating with an MBA from Kellogg School of Management at Northwestern University in the United States and returning to China, according to the sources close to Wen.

Between graduation and the launch of New Horizon Capital, Wen founded a telecommunications equipment maker whose key clients included large banks and securities firms, according to Chinese and Hong Kong media reports. Wen later sold the company.

Beijing, which has historically viewed private equity firms as speculators, is becoming more welcoming of foreign private equity funds to boost investment in China, thereby creating more jobs, viewed by the government as a key issue in maintaining social stability.

Despite Wen's background, New Horizon Capital is considered a foreign fund because of its legal structure and the foreign sources of its dollar capital.

New Horizon Capital's first fund was launched in 2007. Soon afterwards, Wen and his management team, which includes long-time friends from Wen's days in the United States, made some quick investments in privately-held Chinese enterprises with the potential to become market leaders.

'They have a very stable team ... They were school-mates or old friends. They know each other very well,' said another of the sources.

More recently, New Horizon Capital bought a large stake in Chinese Shenzhen-listed wind power producer Xinjiang Goldwind Science & Technlogy, a leading wind power equipment maker in China.

Goldwind is seeking to raise $1.5 billion via a Hong Kong listing this year, Reuters reported last week. – Reuters