Investcorp has made its first investment into the greater China market as part of its global expansion strategy.
The Bahrain-listed firm has invested a total of $250 million in China Everbright’s New Economy Fund. The amount comprises a $150 million commitment to the fund and $100 million in co-investment rights into the Hong Kong-based manager’s fund that will back growth technology companies in China focused on e-commerce and internet services, smart retail and artificial intelligence, according to a statement.
This is Investcorp’s first investment in Asia outside the Middle East.
“I think [for] East Asia, the time is right, right now,” Hazem Ben-Gacem, Investcorp’s co-chief executive told Private Equity International. The firm decided that the way to enter the Greater China market was through a partnership, he added.
“It is a strategic partnership with China Everbright where we are jointly committing in excess of 80 or 90 percent of this vehicle, and the capital has already been earmarked for seven very high growth China technology portfolio that exists today,” he said. A total of $313 million has already been deployed across these companies.
The New Economy Fund has a target of $550 million, of which $350 million will be committed by China Everbright and between $100 million and $150 million will come from Investcorp, Ben-Gacem said.
“A big part of that capital will go towards the follow-on financings for those businesses as needed,” he noted, adding the rest would be used for a handful of other individual businesses.
Investcorp’s investment in the New Economy Fund is part of its global expansion strategy as it seeks to have a more balanced global asset allocation, the firm noted in the statement.
The firm has historically invested on a deal-by-deal basis in private equity. Its portfolio includes investments in European technology companies, business services and industrials companies in North America, and family-owned businesses in the Middle East and North Africa. It has also committed to buyout funds in North America, according to PEI data.
On the rationale for entering Greater China via a partnership, Ben-Gacem identified three ways Investcorp was accessing the region’s market: selecting an experienced local partner with a sovereign background; investing in the technology sector which the firm has experience in; and investing in a diversified portfolio.
Investcorp also has plans to make more direct deals in Greater China and set up a local team in the future, he noted.
The firm has $22.6 billion in assets under management across private equity, real estate, credit and hedge funds, as of end June, according to the statement. It has offices in Manama, Doha, Riyadh, Abu Dhabi, Singapore, New York and London.