China Everbright to close fund in mid-2017 – Exclusive

The fund, focused on US and European companies planning to expand in China, is targeting $500m.

Hong Kong-based fund manager China Everbright Limited (CEL) is set to hold a final close on its global mergers & acquisitions fund by mid-2017, according to CEL M&A managing director Shengyan Fan.

The CEL Global Investment Fund, launched in early 2016 with a target of $500 million, had raised $264 million in April. The fund will invest in equities and equity-linked securities of US and European companies that are targeting expansion in China. CEL will invest mainly in industries such as precision manufacturing, advanced transportation equipment and agricultural technologies, as well as consumer goods, media, and healthcare.

While CEL did not give any explicit return target to its limited partners, Fan told Private Equity International that according to CEL’s cost of capital and internal calculations, they are looking at returns exceeding twenty percent.

Investors in CEL’s previous funds include Axiom Asia Private Capital, MinHang district of Shanghai Municipal Government, and Wuxi Guolian Development Group, according to PEI data.

“One feature of this fund that stands out is the high execution efficiency because by the time we close this fund, it would have been close to fully invested,” Fan added. “We have been making a few large investments in Michigan-based intelligent machine manufacturer Burke Porter Machinery and Chicago-headquartered precision surfacing solutions company Lapmaster Group Holdings in the past years.”

“We made those investments so that by the time we set up the M&A fund, we have a portfolio. It was a conscious decision to do it that way.”

In other news, CEL and venture capital firm IDG Capital Partners have invested 2 billion yuan ($297 million; €270 million) in China UnionPay Merchant Services (China UMS) as part of the firms’ plans to take high growth Chinese companies to overseas markets.

Shanghai-headquartered UnionPay provides bank card services in China. It is the third largest online payment systems provider in the country, covering 337 cities and serving over 5.7 million businesses.

The investment came from the Everbright-IDG Industrial Fund which was launched at the end of June this year with a target of 10 billion yuan ($1.5 billion; ,€1.4 billion), according to a statement. The fund targets investments in financial technology and internet banking, entertainment and education, mobile e-commerce, and semiconductors. Among CEL and IDG’s recent investments are arts college Shanghai Film Art Academy and lighting businesses HC SemiTek Corporation.

CEL has raised more than HK$ 67.8 billion ($8.7 billion; €7.9 billion) as at December 2015 across 33 private equity, mezzanine, venture capital, and sector-focused funds such as health care and real estate.