Cathay Capital boosts China exposure

The firm’s co-founder Ming-Po Cai tells PEI about its plans to strengthen its China office.

As other firm's become jittery about investing in China, Cathay Capital Private Equity , a French firm with offices in Paris, the US and China is strengthening its China operations as it looks to expand its focus on Chinese portfolio companies. 

Commenting on investor caution regarding China, Cathay Capital founder and president Ming-Po Cai told Private Equity International that often “risk is a misperception of opportunity”.

Chinese born Cai resided in France for 20 years before relocating to New York four years ago to expand Cathay's US business, and is now planning to move to Shanghai in September, where he will continue to strengthen the firm's China business. The firm also has an office in Beijing.

Investing in emerging markets like China is all about understanding the consumer and not backing off because of risk, Cai said. “Today we have about 200 million young Chinese consumers born after the 1980's, they are still consumers but they don't consume necessarily the same thing and in the same way as their parents.”

Cai said he is looking forward to investing in more Chinese portfolio companies and is passionate about entrepreneurs because they are “young, active and dynamic.”

Cathay Capital focuses on cross-border investments helping French companies to expand in China and Chinese companies expand in France and the US. The firm's Shanghai and New York office were opened in 2013.

Cathay Capital Small-Cap III, is the firm's latest fund, which held a close of €100 million in December. The fund has a €250 million hard-cap, PEI report earlier. It is seeking to attract LP investment from Europe, the US and the Middle East. 

The firm is also in fundraising stages for two other venture capital, growth equity funds launched last year. The Sino-French Innovation Fund has a target of €250 million and focuses on China, France and the US. Another fund, Cathay Capital North American-Sino Fund has a target of €350 million.

The firm is currently investing out of the Sino-French Midcap Fund, which held a close of €500 million on target in 2014. The fund covers Western Europe and the Asia-Pacific, with a particular focus on China and France in sectors including telecommunications, media and technology, industrials and consumer goods. 

Cathay invested €476 million (£374.3 million) in portfolio companies last year and focuses on sectors including consumer goods, healthcare, the service industries, environment, agriculture and food security, and advanced technology. 

Edouard Moinet, Cai's co-founder and managing partner at Cathay has been instrumental in the firm's development in France, Cai said. David Hoffman, co-founder and managing partner of Cathay's North American operations joined in 2013, a year after consulting for the firm, having previously worked at Charterhouse. Hoffman has overseen and organised the firm's business development activities across consumer, business services and healthcare services. 

Cathay recently hired its first Chief Operating Officer, Daniel Balmisse, who spent 11 years at Bpifrance.  

According to Cai, the firm has raised €1.6 billion to date with 50 people and 55 deals. Cathay also has an office in Munich.