3i in talks over China fund

The Michael Queen-led firm is negotiating with the Chinese authorities over the launch of local private equity fund. To date, the firm has invested in China from a global growth capital vehicle.

3i Group, the listed private equity firm, is in talks with the Chinese authorities over the creation of a private equity fund, a spokesperson at the firm has confirmed.

News that the London-headquartered firm is in talks and that a fund could be launched at some point this year, was first reported in Spanish newspaper Cinco Dias, quoting chief executive officer Michael Queen as the source.

The 3i spokesperson added that the talks were at early, exploratory stages.

Michael Queen

3i will also look to raise a €5 billion pan-European private equity fund within the next two to three years, the Spanish newspaper reported. Currently the firm invests from two funds in Europe: a €5 billion buyout fund and a €1.2 billion growth capital fund. The buyout fund, 3i Eurofund V, which was raised in December 2006, was more than 60 percent invested as of the end of December. The growth capital fund, which invests across Europe, North America and Asia, was around 35 percent deployed at that time.

During 2010, Queen drove a restructuring of 3i’s business model, which included the acquisition and establishment of a debt management business and the merging of the growth capital and buyout divisions into one private equity line. A new €5 billion European private equity fund would be a logical step.

3i has had a presence on the ground in China since 2001. The firm focuses on growth capital investments in the country, acquiring minority stakes in established and profitable businesses, typically making investments of between $20 million and $150 million.