Cathay closes €500m Sino-French fund

The cross-border fund has hit its hard cap after less than a year in the market

Paris-headquartered private equity fund Cathay Capital has reached a final close on its third cross-border vehicle, reaching the hard cap of €500 million ($621 million), according to a statement.

The final close comes six months after the firm made a first close on €460 million, having raised money from a range of investors globally. Cathay said 80 percent of its LPs were institutional investors, with the balance coming from family offices and high net-worth individuals.

Cathay secured its two cornerstone investors in March, when China Development Bank and Bpifrance each committed to invest up to €100 million in the vehicle, Private Equity International reported earlier.

The fund, Cathay Midcap Growth Fund III, will invest in mid-market companies in France and China, as well as the rest of Europe, taking significant minority or majority stakes and intends to take more significant positions in larger companies and larger deals compared to its predecessor funds.

The firm's first private equity fund, Cathay Capital I, was launched in 2006 and raised €70 million. It is now fully invested, while Fund II is still being deployed, as is another side vehicle, a €150 million Sino-French fund for small- and medium-sized enterprises, also funded by CDB and Bpifrance and launched in 2012.

Cathay has been active this year, making “several investments” in both China and France, as well as exiting a number of investments from the first Cathay Capital fund, generating “significant returns” for its investors, according to the firm.

Private equity cross-border activity between Europe and China has been increasing this year, GPs having watched the opportunity for years.

Notable deals in 2014 include the £900 million ($1.5 billion €1.1 billion) Hony Capital investment in UK-based PizzaExpress and Baring Private Equity Asia’s investment in Cath Kidston.

Moreover, private equity firms including Kohlberg Kravis Roberts have circled the take-over of France’s Club Méditerranée, facing competition from Chinese conglomerate Fosun International and French private equity group Ardian.