China PE group goes on clean-tech deal hunt in London
The Shanghai-based private equity group Nord Engine Asset Management is making a foray into the UK market and is on the hunt for deals.
It wants to be a first mover in the PE space in the UK and setting up the first base for a Chinese firm in London is a key part of the strategy.
“What we are trying to do in China is act as a platform for UK companies to find capital, manufacturing capacity and strategic partners,” Jenya Khvatsky, investment director at Nord Engine told AsianInvestor.
Chinese PE firms have been increasingly active in the UK, with last year's deal where Beijing-based Hony Capital paid $1.5 billion for the restaurant chain Pizza Express being one of the most high-profile, as reported by sister publication FinanceAsia.
Nord Engine, which has more than Rmb17 billion ($3 billion) in AUM, is looking to assist UK technology firms who need a strategic partner to commercialise their products. That search will go alongside the firm’s pursuit of clean-energy acquisitions in the UK.
The London arm, Nord Engine Capital, intends to channel $315 million into deals with a focus on green technology in the UK and continental Europe.
“The opportunity for clean technology is abundant in China, while there is also very good indigenous clean technology in the UK,” said Khvatsky.
Zhu Yang, Nord Engine Group president and founder, previously told Reuters that it had targeted around five British SMEs, one of which is in the biotechnology sector.
The four-month-old London office, however, is still in the deal origination stage. “As news of our presence spreads, we’ve received steady enquiries from entrepreneurs and companies seeking capital.” Khvatsky said.
And if a technology is expected to be viable in China, the pace of commercialisation could be faster than in other markets, Khvatsky argued.
“Quite frankly, the great thing about China is that there is a general buy-in for clean technology. There is also less of the ‘not in my backyard issues’ that can delay projects.” said Khvatsky. “There appears to be more support for cleantech in China with easier access to capital, supply chains and sites.”
Likewise, potential Nord Engine partners could also benefit from reduced risk by taking up the option of manufacturing in China with lower labour and manufacturing costs.
But some British companies have had reservations over commercialising their projects in China because of questions of intellectual property protection in the country.
Khvatsky downplayed the issue, suggesting that Nord Engine’s investments into such businesses meant that its interests were aligned with its portfolio companies, including that of defending intellectual property issues.
Nord Engine joins other Chinese fund managers in setting up shop in the British capital this year, firms such as Harvest Global Investments and Haitong Securities through its acquisition of Banco Espirito Santo.
“The UK is also a centre for various advanced technologies, but due to a relatively small domestic market, and global competition for capital, some of these technologies have not yet been fully commercialised.
“We believe that the Chinese market has great potential for the application of these technologies, making it an environment for mutually beneficial trade.”