China Everbright Limited (CEL), the Hong Kong investment arm of mainland financial services group China Everbright, has raised four new funds this year and has identified key areas of investment for both its proprietary portfolio and the private equity strategies it manages for clients. They are elderly care, medical care, semiconductors, consumption upgrading and financial technology.

And it will be hoping to tap a new vein of capital. This year mainland insurers started investing in CEL’s PE funds, said chief executive Chen Shuang at the firm’s first-half results conference in Hong Kong on Wednesday.

Certainly insurers have been ramping up their allocation to the private market, and some of them are even bidding against asset managers for deals.

As of June 30, CEL’s assets under management stood at HK$106.6 billion ($13.7 billion), of which 22% is proprietary capital and 78% is third-party money. Of the total, 88% was in private markets and 12% in public secondary markets.

Sector focus

The firm is now looking to raise $1 billion for an overseas infrastructure fund, after reaching $300 million at first close in July, said Chen. It has also launched three other strategies this year: an elderly healthcare fund (Rmb500 million ($76 million)); a multi-strategy equity fund (Rmb5 billion), jointly established with China Merchants Bank; and a smart manufacturing fund (Rmb520 million). The first launched in August and the latter two in July.

Chen explained why CEL was now focusing certain areas. In respect of elderly care, he said it would develop insurance and securitisation products for the sector in cooperation with pension insurance companies.

Meanwhile, CEL had been worried about potential regulatory constraints on fintech, but those concerns have subsided and fintech is now an area that the firm “has to invest in”, Chen said.

China is having success in improving economic efficiency through the application of internet technology, he noted. Hence China Everbright invested in consumer finance firm SinoData last year through a buyout fund it jointly established with IDG Capital in June last year.

Indeed, noted Chen, demand driven by the internet economy in China is expected to push the import value of semiconductors past that of oil.

Moreover, in the first half of this year, CEL expanded investments into mobile video and online payment companies.

Proprietary investment

On the proprietary side, CEL employs its $2.9 billion of proprietary capital in four areas: as incubator or seed money for new funds, direct and co-investing, long-term industry investment, and liquidity management. This capital is invested in six categories (see table below).

HOW CEL'S PROPRIETARY CAPITAL IS ALLOCATED

Category

Share

Structured finance

29%

Strategic industry investment

28%

Primary market investment

16%

Fund incubation

11%

Secondary market investment

9%

Investment in third-party funds

7%

Source: CEL

One example of a co-investment deal done by CEL is its participation in IDG Capital’s acquisition of International Data Group in March.

As for long-term industry investment, CEL remains the largest shareholder of China Aircraft Leasing Group with a 33.6% stake. Aircraft leasing is another area that CEL is pushing to develop.