CITIC Capital has invested an undisclosed amount in S.F. Express, a Chinese delivery services firm, alongside a consortium of investors including Oriza Holdings and China Merchants Group, according to a company statement.
Although no financial details were disclosed, the consortium acquired a stake of “no more than 25 percent” and represents “by far, one of the largest renminbi-denominated transactions of the year”, the statement said.
The consortium will get board representation, although details have yet to be decided.
The deal was made out of the firm’s first RMB-denominated fund, which made a first close on RMB 3 billion (€367 million; $490 million) in November 2011, according to a source close to the firm. The fund is targeting RMB 4 billion and is expecting to close by the end of 2013. LPs include the National Social Security Fund of China.
This lucrative industry is very restrictive to foreign players. Basically, foreign players are limited to how many destinations [in which] they can operate, and under the Chinese Postal Law of 2009, foreign companies may not invest in [businesses operating in the] domestic express delivery of letters
Yichen Zhang, chairman and CEO, CITIC Capital
The deal highlights the reason why foreign firms in China that also manage RMB funds hold an advantage. Chairman and chief executive at CITIC Capital, Yichen Zhang, explained to Private Equity International that his firm invested from its RMB fund because the express delivery industry has limitations for foreign investors.
“This lucrative industry is very restrictive to foreign players. Basically, foreign players are limited to how many destinations [in which] they can operate, and under the Chinese Postal Law of 2009, foreign companies may not invest in [businesses operating in the] domestic express delivery of letters – though the definition of ‘express delivery of letters’ is never clear,” he explained.
However, Zhang says for local funds, the logistics market is very attractive. “The rapidly expanding domestic market, huge growth of the organised retail sector, the emergence of e-commerce and the shift of the economy up the value chain, all point to very strong growth potential for the logistics sector.”
Founded in 2002, CITIC Capital is a Hong Kong-based alternative investment management and advisory company. The firm manages over $4 billion of capital from a diverse group of international institutional investors, according to the firm. Its core businesses include private equity, real estate, structured investment and finance, asset management and venture.