Baird Private Equity has launched an investment team of seven in China, as the US middle market firm prepares to make its first direct investments in Chinese companies.
The firm has been active in China since 2003, when it established a team of 20 operating professionals there to help its US and European portfolio companies with sourcing, manufacturing and distributing in Asia. The new investment team will work alongside the operating team out of Baird’s offices in Beijing, Shanghai and Hong Kong.
Baird director Paul Carbone told PEO that after years of working on the ground in China, the firm understands the market and has the local network to take advantage of growth opportunities in Chinese companies.
“There is clearly an interesting growth market that we think has meaningful secular trends to it in the Asian marketplace,” Carbone said. “We think it’s an interesting time to take advantage of that growth, especially when other markets around the world certainly do not have that sort of growth associated with them.”
The new investment team will be led by partners Hock Goh, Huaming Gu and Brett Tucker, as well as investment committee chairman Bruce Allen. Goh has been a Baird operating partner in China since 2004; Gu was previously a senior vice president at EQT Partners Asia and Tucker was most recently a principal at Baird. Allen was previously chief executive officer of Hong Kong private equity firm AIF Capital.
The team will target small companies with high growth potential in the manufactured products, healthcare and business services industries, a continuation of Baird’s strategy in the US and Europe. Baird plans to invest in companies with enterprise values of between $20 million and $75 million, Carbone said, a sector of the Chinese market that Baird believes is currently underserved.
“There are meaningful numbers of smaller companies that don’t necessarily have access to the same sort of capital markets and financing opportunities that other companies operating in more mature marketplaces have,” Carbone said.
Baird raised a $37 million fund in 2004 to co-invest alongside other Baird funds in US companies with strategic operations in China. Carbone declined to comment on whether Baird would raise a dedicated fund for investments in Chinese companies, citing regulatory restrictions.
Baird also has a small dedicated investment team in India, and is “bullish” on pan-Asia opportunities in general, Carbone said.