Al Salam Bank-Bahrain enters China’s private equity market

The Bahrain-based bank has agreed to partner with Chinese private equity firm CMIA Capital Partners.

Al Salam Bank-Bahrain is the latest institution to join the race to invest in China, after signing a deal with Asian private equity firm CMIA Capital Partners to back small- to medium-sized Chinese companies.

The Islamic bank, whose April 2006 initial public offering raised more than $7 billion, will target businesses that are located in industrial, highly developed regions such as Jiangsu, Shandong and Fujian, according to a statement.

The bank is targeting internal rates of return of 25 percent or higher from its investments.

It is the latest Bahrain-based firm to express interest in the Asian market. In January, alternative investment house Investcorp launched a long/short hedge fund focused on Asia. Arcapita, the international investment bank formerly known as First Islamic Bank, has also expressed interest in Asia.

Already active in the region are international private equity firms including The Carlyle Group, Warburg Pincus, Kohlberg Kravis Roberts, Texas Pacific Group and Permira.

“Al Salam Bank-Bahrain aims to adopt a strategy targeting investments in [the] Asia and Asia Pacific region as they enjoy substantial untapped investment opportunities in focused sectors such as alternative energy,” said the bank’s executive vice president and investment group head, Omar Marwan Kamal, in a statement.

Financial terms of Al Salam Bank-Bahrain’s agreement with CMIA Capital were not disclosed.

According to its website, CMIA Capital does not invest in companies that engage in environmentally destructive practices, in companies involved with gambling, in companies with unfair labor practices, nor in companies that produce alcohol, tobacco or pornography products.

The four year-old private equity firm was founded by managing partners Chong Min Lee and Anson Wang.

Lee has held positions with JP Morgan, Cargill and Commercial Union. Wang was regional managing director at HSBC Asset Management and chief executive for State Street Global Advisors’ Asia division.