US-based growth capital firm FTV Capital has teamed up with French-Chinese private equity firm Cathay Capital Private Equity to invest $36 million in eBaoTech, a Shanghai-based provider of software solutions to the global insurance industry.
eBaoTech develops configurable insurance software to property and casualty (P&C) and life insurers to help automate insurance operations. It has offices in eleven countries across Europe, Asia Pacific and the Americas, according to the company.
The stake that the firms received is undisclosed, but both will appoint one member to eBaoTech board, according to Christopher Tan, principal at FTV.
FTV led the financing, and brought in Cathay as a local Shanghai partner, Tan said. The funding for the deal came out of the firm’s Financial Technology Ventures III fund. FTV is currently targeting $500 million for its FTV IV fund, which launched last year, according to Private Equity International’s data division.
Tan became interested in eBaoTech because even though the company was based in Shanghai, it's clients were global insurance firms, he said. Some of eBaoTech’s clients include Argo International, ACE Life, Botswana Life and PICC Life in China.
With a significant client base, the company is already profitable, added an FTV spokeswoman, and the investment is primarily to accelerate the company’s growth trajectory. FTV believes its relationships in Western markets will facilitate eBaoTech’s growth overseas.
“[FTV Capital] has many relationships in financial service and insurance in the US and Europe, and that was very attractive to eBaoTech,” Tan said.
Tan added that while China has many domestic software providers serving the domestic market, eBaoTech is the only Chinese company he has found selling its technology on a global scale. Just a few years ago, it would not have been possible to find even one, he said.
In 2005, FTV made a China-related investment in Freeborders, an IT outsourcing firm with operations in Shenzhen, Tan added.
With over $1 billion in assets under management, FTV Capital makes growth capital investments in four sectors: business services, financial services, payments/transaction processing and technology, according to the firm.
Cathay Capital Private Equity is the first French-Chinese private equity firm focused on Europe-China growth capital, according to the statement.
The firm currently has €345 million assets under management, and last year was selected to manage the €150 million ($184 million) joint cross-border fund of China Development Bank and French sovereign wealth fund Caisse des Depotsde et Consignation.