Baring Asia banks on China steel sector

Hong Kong-based Baring Private Equity Asia has made two investments totalling about $100 million in China’s steel-related industry, a sector the firm had identified early last year when it was out of favour.

Baring Private Equity Asia has sponsored the management buyout of Yingde Gases Investment, an industrial gas business in China that supplies primarily to steel sector. Simultaneously it has invested $50 million in Sichuan Hidili Industry, a coking coal and coke company in Chengdu. The two investments amount to $100 million, according to a statement.

Yignde Gas was previously backed by Torch Automotive Group, a Shenzhen-listed company that sold its entire 48.5 percent stake in Yingde to focus on its core business.

Jean Salata, chief executive officer of Baring Asia said the investments were typical of Baring Asia’s value-based sector investment approach.

“We took a position in steel early last year when it was out of favour because we recognise the sector’s long-term fundamentals. Then we found the right niche players.”

Baring Asia raised $490 million last year to invest in opportunities across three main geographies: China, India and Japan, a new market for the firm which opened a new office in Tokyo last year.

In addition to the investments in China, Baring Asia has also invested in the steel sector in India. In December, it completed a $35 million investment in Bhushan Power and Steel, a steel mill.