CDB, Bpifrance back €500m Sino-French fund

The two institutions have agreed to commit up to €100m each to Cathay Capital’s third vehicle.

China Development Bank and Bpifrance have come in as cornerstone investors for Cathay Capital Private Equity’s third fund specialising in cross-border investments between France and China, according to a statement.

The vehicle, Cathay Midcap Growth Fund III, was launched this year with a €500 million target and hard-cap.

It will invest in mid-market companies in France and China, as well as the rest of Europe, taking significant minority or majority stakes.

Its two anchor LPs, CDB and Bpifrance, have each committed to invest up to €100 million in the fund. It has also received backing already from existing LPs in its predecessor vehicles, the statement said.

The vehicle expects its first close in June, although no amount was given by the firms.

Cathay’s Fund II, a 2011 vintage, collected €190 million.

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

“Midcap companies represent a very promising segment, with opportunities for firms in France and China. French companies, especially those in the lifestyle, industrial and technology sectors, will gain from increased exposure to the growing consumption market in China,” Huaibang Hu, president of China Development Bank, said in a statement.

“Chinese companies will learn from advanced know-how to improve their practices. It is a win-win situation. The Sino French (Midcap) Fund will help us strengthen the links between the two continents.”

Mingpo Cai, president of Cathay, added, “The launch of this new fund builds on our eight-year experience in cross-border investment between China and Europe. Over recent years, Cathay Capital’s multicultural team has grown to 30 people, including six partners, and offices in Paris, Shanghai, Beijing, and New York.”