CIC, Belgium commit to A Capital cross-border fund

A Capital’s debut cross-border fund is targeting up to €500m for European mid-market companies with growth potential in China.

The China Investment Corporation and the Belgian Federal Holding and Investment Company have committed an undisclosed amount in A Capital’s China outbound fund, which will invest in European mid-market companies’ expansion into China. 

The sovereign wealth groups will invest through a feeder structure referred to as the “China Belgium Mirror Fund”, according to the release. A Capital, which maintains offices in Brussels, Paris, Beijing and Shanghai, is targeting €250 million with a €500 million hard-cap.

The firm held an unspecified first close on the fund recently, chairman and managing partner André Loesekrug-Pietri told Private Equity International, and is expected to hold a final close by the end of the year.   

To date, the fund has generated interest among funds of funds, US and European family offices and private wealth management firms, he said. 

“You can never predict how these fundraisings go, so this is quite an achievement for us,” he said. “We are a relatively young fund, one-year old, we started with a deal that we financed ourselves with co-investors.”

A Capital advised Chinese conglomerate Fosun International when it took a 7.1 percent stake in Club Méditerranée in 2010 to expand the resort company into China. Since then, the firm has stocked its own investment team with Chinese and European professionals to replicate the strategy.

“We want to have a strongly European image, and I think that’s why … CIC invested with us. Because they knew it was important to invest with local partners,” Loesekrug-Pietri said. 

The firm will target acquisitions in European mid-cap companies with revenues of more than €100 million and “strong growth potential in China”, according to the release. The firm will also partner with Chinese private and state-owned co-investors on deals.

The CIC has built up its private equity portfolio rapidly in recent years. The sovereign wealth fund increased its holdings to 21 percent in 2010, up from 6 percent the previous year. Last month, CIC emerging markets manager Olivia Ouyang took on the European private equity portfolio after two senior executives left the $460 billion fund. Xiaoqing Bai, who oversees North American private equity, took over the global real estate portfolio.