Mideast investors launch China private-equity fund

Jade China will invest in growth funds operating in the PRC.
A Chinese-themed fund of private equity funds named Jade China Value Partners LP has been launched by Middle Eastern investors. It will concentrate on growth and expansion stage private equity funds and co-investments in China. Whilst there is a preference for traditional investments, there will be limited commitments to early stage, buyouts, real estate and niche funds.

The fund has a target size of $150 million and is sponsored and partially seeded by the Kuwait China Investment Company, whose investors include the Kuwait Investment Authority, National Investment Company, Al-Ghanim Industries and other Gulf investors.

The fund is organized by Jade Alternative Investment Advisors, which was founded in 2005. The firm has offices in Beijing and Shanghai and is planning to open in Europe and the Middle East during 2007.

ôOur fund offers investors diversified exposure to ChinaÆs growth, and at a substantially smaller capital commitment than would be the case for an investor who tries to build a China-focused private equity portfolio independently,ö says Jonas Lindblad in Shanghai, JadeÆs finance director and head of investor relations. Prior to joining Jade, he worked as a senior analyst at global consulting firm Pyramid Research in London and Dubai.

ôOur preference for single-country funds demands strong local presence and a focused approach," Lindblad says, "since our value proposition is not merely built on access but, equally important, on sourcing and evaluation.ö

Ludvig Nilsson is director and managing partner of the firm. Before founding Jade, he worked as a strategy consultant for Pricewaterhouse Coopers in the transaction services department in London, where he focused on commercial due diligence for private equity clients, including a wide range of China focused private equity.

Target IRR for the fund is 30%. The management fee is 1.5% and the performance fee is a carried interest of 10%, over an 8% preferred return/hurdle rate.

Jade will invest a minimum of $5 million and a maximum of $25 million into a given single fund. The typical individual commitment size to the fund is $5-10 million with a minimum of $2 million for individuals and $5 million for institutions.

ôWeÆre starting the fund now because of the large number of successful exits and the rapidly increasing number of fast growing private companies with strong underlying fundamentals,ö Lindblad told Asian Investor. ôThis is coupled with the high barriers to entry in ChinaÆs private equity market, which both provide a strong case for a country-focused fund of funds. Most investors with an interest in China find it prohibitively challenging to navigate ChinaÆs private-equity market independently.ö
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