GSR launches $5bn M&A fund

Beijing-headquartered tech-focused investment house GSR Capital has launched a mergers and acquisitions fund seeking $5 billion, according to a statement from the firm.

The GSR Global M&A fund, which will target cross-border buyouts and the M&A activity of industrial and emerging technology companies with “multi-billion dollar scaling opportunities in China”, has already secured $1 billion in commitments from GSR GO Scale Capital and other unnamed institutional investors.

GSR GO Scale Capital is an investment fund backed by GSR, US-based venture capital firm Oak Investment Partners, and a consortium of other investors, including Asia Pacific Resources Development Investment, a holding company set up by Hong Kong property magnate Cheng Kin-ming to invest in clean technologies.

The new vehicle will be managed by a team led by Sonny Wu, co-founder of GSR Ventures and chairman of GSR Capital.

The fund will target overseas investments in “qualified leading enterprises” in sectors including clean energy, bio-pharmaceuticals and life sciences, bulk commodity investment, traditional and internet finance, wireless communication, and “cultural industry”.

“Our new fund will either buy-out or acquire a minority stake in target enterprises through a combination of equity and leveraged debt; and then we will create value for them by converging China and global resources, adopting cross-border and technical arbitrage and eventually realizing the capital gains through IPO or M&A exits,” Wu said in the statement.

GSR, which has offices in Beijing, Hong Kong and Palo Alto and has more than $2 billion under management, also runs venture and growth capital funds.

In March GSR GO Scale Capital agreed to acquire 80.1 percent of Philips NV’s lighting unit Lumileds in a $2.8 billion deal. The remaining 19.9 percent was to be retained by Philips. Bank of China is mandated lead arranger and sole book-runner of $1.93 billion debt facilities to finance the transaction, according to GSR’s statement.

Earlier this year Private Equity International reported that CVC Capital Partners and KKR were exploring a joint bid for the lighting unit.

GO Scale Capital is also invested in lithium-ion battery products supplier Boston-Power.

The M&A fund will “continue duplicating the early investment successes in Boston Power, Airspan and Philips Lumileds”, Wu said, “creating value and superior returns through China localisation with a top-notch team of industry leaders”.