First Eastern Investment Group, one of the pioneers of private equity investments in China, has launched a new fund focusing exclusively on the growing economic relationship between Europe and China. First Eastern was founded by Victor Chu in 1988 and has over 80 direct investments in Chinese companies.
The new Euro-China fund sees First Eastern teaming up with European corporate and private equity heavyweights Siemens, BASF, Zurich Insurance Company and Mannheim, all of which are founding limited partners in the new fund. The partners bring significant breadth of expertise to the table and give a flavour of the type of investments the new fund will be focused on.
On the manufacturing side Siemens and BASF bring technology and chemical expertise respectively. Furthermore, Zurich Insurance Group adds financial services know-how at time when China's financial services sector is becoming an increasingly hot topic amongst strategic and private equity investors.
The Euro-China Fund announcement comes a day after regional Asian private equity firm H&Q announced a tie-up with US-based THL Partners. These partnerships signify the growing importance of scale and global reach for Asian specialist private equity investors, and equally the need for local experience and access to deal flow for global investors looking to gain a slice of the China growth story.
The new Euro-China fund is aiming for a close by the end of 2005, and expects a minimum commitment of Eu100 million. The fund's European partners will be contributing capital to the new fund, although the sponsors are also looking to raise money from external parties.
The new fund is targeting investment opportunities that involve the growing trade and investment flows between Europe and China, as well as opportunities to maximize synergy benefits between European and Chinese enterprises through market access, technology transfer and strategic alliances.
"The EU is China's largest trading partner," says First Eastern's Victor Chu. "The new fund brings together some of Europe's largest and most successful companies to provide capital and expertise to China's fast growing market and provides opportunities for Chinese companies to expand into Europe."
Despite the current environment of Sino-Euro trade tensions Chu says, "I'm confident the new fund can make a significant contribution towards furthering China-EU investment and economic relations."
Speaking at the recent EU-China Summit, EU trade commissioner Peter Mandelson said of the proposed fund, "It's a good example of how China and Europe are working together. As the two regions invest in each other, we are able to bring closer together Europe's technology and advanced manufacturing skills with China's huge domestic market, its regional brands and wide distribution networks. However companies, Chinese and European, need experts with them to make this happen, and the role that private equity can play here is clear."