Private Equity News & Analysis

KKR leads $160m investment in Chinese lender

The firm's first FIG deal in China was in partnership with GIC Special Investments and CICC Private Equity.

-

A Kohlberg Kravis Roberts-led consortium has invested $160 million for a significant minority stake in International Far Eastern Leasing Company.

The investment will be used to support the company’s growth. It is also a step towards the Shanghai government’s goal of transforming the city into a global financial and shipping hub, Kong Fanxing, Far Eastern’s chief executive officer, said in a statement.

The other members in the investor group are GIC Special Investments, the private equity arm of sovereign wealth funds Government of Singapore Investment Corporation (GIC), and CICC Private Equity, affiliated with Chinese investment bank China International Capital Corporation (CICC).

Far Eastern is a subsidiary of Sinochem Group, a state-owned enterprise primarily involved in the agriculture, energy, chemical, real estate and finance sectors.  Sinochem will retain a controlling stake in the company, according to a KKR statement. No furthers details on the transaction have been disclosed.

Set up in 1991, Far Eastern provides financial leasing services across the medical, printing, shipping, construction, machinery and education industries. As of the middle of this year, the company has signed leases valued at more than RMB26 billion ($3.8 billion; €2.6 billion). Headquartered in Shanghai, the company has offices in Beijing, Shenzhen, Wuhan, Changsha, Jinan, Shenyang and Chengdu.

The deal marks KKR’s maiden investment in China’s financial services sector and its third in the country, according to the firm’s website. Its previous Chinese investments include Ma Anshan Modern Farming, a Chinese dairy farming company, and Tianrui Group Cement Company, a cement producer. The firm is currently investing out of KKR Asian Fund, which closed in 2007 on $4 billion. The buyout fund primarily invests in China, Japan and Australia

As part of a wider push to increase its alternative assets under management, GIC has upped its allocation to private equity to 11 percent from 8 percent, it revealed last month.

CICC Private Equity has two divisions, namely CCIC Jia Cheng Investment Management Company, which makes investments in China in RMB, and CCIC Investment Group, which makes overseas invstments in US dollars. The firm targets growth capital, pre-initial public offering and buyout opportunities.