By Anne-Sylvaine Chassany, Private Equity Correspondent*
June 30th, 2014
French state-backed investor BPI France and China Development Bank have committed €100m each to back a private equity fund targeting medium sized companies in France and China.
The moves, which follow the state visit of President Xi Jinping in France in March, underscore Western governments’ courtship of China in an attempt to bolster jobs at home.
The “Sino French Midcap Fund”, managed by Cathay Capital, a private equity group founded by Chinese national Mingpo Cai and Frenchman Edouard Moinet, has amassed a total of €460m so far, BPI France said on Monday. It has a final target of €500m.
The fundraiser echoes recent initiatives in Europe. Russian Direct Investment Fund, the $10bn state-backed fund started by Russian president Vladimir Putin three years ago, set up a joint $2bn fund with China Investment Corp in 2012, and this year, it invested alongside the Chinese sovereign wealth fund in Sodrugestvo, a Russian oilseed processor.
Two years ago, Belgian state-backed Federal Holding Company and CIC committed to a €200m fund managed by A Capital, a private equity group started by Frenchman Andre Loesekrug-Pietri, that aims to find European investment opportunities for Chinese investors. A Capital co-invested in Club Med alongside Chinese conglomerate Fosun.
The French-Chinese fund “marks an important step forward in our ongoing collaboration with (Chinese Development Bank) and Cathay Capital in long-term development of French and Chinese companies,” Nicolas Dufourcq, Chairman of Bpifrance said in the statement.
This is not the first fund Cathay is managing on behalf of the two investors. In 2012, they invested a €150m fund targeting small companies. The new fund would invest larger amounts in bigger companies through minority and majority stakes, it said.
Cathay Capital, which mainly operates from Shanghai and Paris, was started in 2006 and targets French companies that want to expand in China, and vice versa. It has a mandate to spend about half its money in both countries. It will also look at deals in Germany after it opens an office in Frankfurt later this year. The team is among a handful of fund managers that have sought to exploit their political and business ties in Europe and China to raise money.
This fund “heralds a significant new phase for Franco-Chinese co-operation in the area of private equity investment, especially in mid-cap companies, which we feel is a particularly promising segment presenting numerous opportunities”, Haibin Fan, president of China Development Bank said on Monday.