Mandarin Capital Partners may launch Fund III in 2016

Mandarin Capital Partners (MCP) may launch its third fund next year, MCP founder and chief executive Alberto Forchielli told Private Equity International.

Its second fund, MCP II, is almost halfway invested. The fund, which links mid-market European businesses with Chinese partners, has “a few more” acquisitions pending in the next couple of months, Forchielli said.

“We have a very, very strong pipeline all over Europe.”

MCP II held its first close in June 2013 targeting €200 million, Forchelli said. The fund has raised €111 million, according to PEI Research & Analytics. Intesa San Paulo was a cornerstone investor. Other commitments came from Fondazione Cassa di Risparmio di Trento e Rovereto and Fondazione Cassa di Risparmio di Bologna.

The firm’s investor base is mixed with large institutional investors coming from Asia, Europe and the US, Forchielli said.

Main investors in MCP’s first fund, a €328 million, 2007-vintage vehicle also included Intesa San Paulo, China Development Bank and The Export-Import bank of China.

That fund invested in nine European companies and one Chinese one between 2008 and 2012, many of which have been divested.

MCP’s investments are split equally between minority and majority stakes, although it would prefer to take only majority stakes, Forchielli said.

For its most recent transaction MCP II teamed up with Hong Kong-listed Zoomlion Heavy Industry, Science and Technology Company to acquire 75% of Italian waste water treatment firm Ladurner Ambiente for €75 million, according to reports.

There is considerable demand for environmental projects by Chinese companies, said Forchielli, emphasising that the Zoomlion deal is not indicative of what MCP typically does. “We generally don’t [do these deals] because Chinese companies are not experienced enough,” he said.

In early September MCP acquired Bologna-based FB Hydraulic through a holding company Hydro Holding for an undisclosed sum.

MCP II has also invested in Italian company, Industrie Chimiche Forestali acquiring a controlling interest in July 2014, alongside Private Equity Partners, and other co-investors.

In January this year MCP also invested in Italian company Tieffe, which specialises in fittings for hydraulic hoses.

Forchielli explained that one of MCP’s aims is to help European companies move into Asia, especially China, and become more international. He noted that back in the late ‘80s MCP was more focused on investing in Asia but found the market to be “extremely competitive”. It was better financially to invest in Europe, he said.

MCP manages assets of €500 million.