CITIC Capital’s China fund to do overseas deals

The Hong Kong-based buyout house has added a cross-border allocation to its China Fund III which is expected to hit a $2bn final close by June.

CITIC Capital Partners, the private equity unit of Chinese conglomerate CITIC Capital Holdings, has added a cross-border element to the investment strategy of its latest China buyout fund, a source with knowledge of the matter told Private Equity International.

The firm, which is set to hold a $2 billion final close on its latest China buyout fund by June this year, is adopting a similar approach as its predecessor fund – focusing on TMT, healthcare, education and financial services, but along with these sectors, CITIC Capital Partners will also look at doing cross-border deals in the US, Europe and Australia, a first for its China buyout fund.

The source noted that although “cross-border deals with a China angle” will be a new part of the strategy, Fund III is primarily a China buyout vehicle.

The firm began fundraising for CITIC Capital China Partners III in May 2016 and has since gathered above $1.5 billion of capital commitments mainly from previous investors.

The fund has a high re-up rate and some of the limited partners had doubled the size of their commitment, the source noted. Pension funds, funds of funds and sovereign wealth funds made up the bulk of Fund III’s investor base.

The source did not provide investor details but the Canada Pension Plan Investment Board, Belgian investment firm Brederode SA, and Swedish corporate pension fund SEB made commitments to Fund II, according to PEI data.

The firm has fully deployed its second China-focused vehicle, 2009-vintage, CITIC Capital China Partners II, which closed on $925 million, the source said.

CITIC Capital Partners manages $4.5 billion of committed capital on behalf of over 60 international investors. In February this year, the firm closed its third Japan buyout fund on $266 million, exceeding the original target of $250 million.