As founder of the Microsoft Consulting business in Asia in 1994 and a pioneer in the development of Microsoft China between 1994 and 1999, Graham Brant knows a thing or two about technology businesses and also about Asia. The same could be said about Alfred Shi, founder of Chinese media group Frame Media, which merged with Focus Media and then completed a hugely lucrative Nasdaq listing in 2005.
The two men have joined forces as cofounders of Shanghai-based Beyond Asia Capital, an investment group that aims to turn Chinese industrial companies into global leaders. “Our supposition is that China will produce a whole range of companies that will be global leaders in their sectors,” says Brant. “The first wave of Chinese companies to enter the global stage comprised big-name exporters. But the next wave will be companies that understand more about brands and distribution. They will be experts in end-to-end logistics, not ‘pile it high, sell it cheap’ merchants.”
Launched last year, Beyond Asia Capital has just signed up a so-called ‘funding partner’ in the form of Sopaf Asia, the Asian arm of Sopaf, an investment company listed on the Italian Stock Exchange. The deal involves Sopaf Asia's China Opportunity Fund taking an undisclosed stake in Beyond Asia Capital and being granted access to the firm's deal flow. Beyond Asia typically invests £1-3 million ($2-6 million) of its own money at the first-round stage and then brings in its ‘funding partners’ at the second-round. Aside from Sopaf, these partners are all high-net-worth individuals.
Says Brant: “The team here has a very long track record of business building. Our skill is hands-on investing in the SME space, in companies with $50-$100 million of turnover. They're typically private, maybe looking for an IPO. We want to find Chinese companies that are leaders in their niches.”
One company this applied to was Mogenesis, a medium-sized Chinese telecom. Beyond Asia advised the firm on merger discussions with a range of interested parties before agreeing and executing a deal with global software licensing company Symbian in November 2007 that saw Mogenesis become Symbian Asia Pacific. “They wanted to be part of a large global organisation in an area where a few global leaders will emerge,” says Brant.
BLACKSTONE IN $60M INDIAN LOGISTICS DEAL
The Blackstone Group has agreed to purchase a 10.4 percent minority stake in Indian logistics operator Allcargo Global Logistics for $60 million (€41 million).
The company said Blackstone's investment will be a mix of equity shares purchased at 934 rupees each, as well as debentures and warrants, both of which are convertible to equity shares within or upon completion of 18 months after issuance.
Blackstone also intends to purchase additional shares of Allcargo on the open market but will keep total ownership below 15 percent, according to Allcargo.
The investment will be used to fund Allcargo's expansion plans and will provide Blackstone with additional exposure to the fast-growing Indian economy.
BARING ASIA BUYS INTO CHINESE CLEAN ENERGY
Baring Private Equity Asia has invested $88 million (€56 million) in the buyout of methane producer Asian American Gas, together with Chengwei Ventures, a Shanghai-based venture capital firm. Baring Asia led the co-investment, contributing about $74 million, said Gordon Shaw, managing director for Baring Asia's China operations.
The investment was made through China CBM Holdings, a special purpose vehicle created for the buyout.
Jean Eric Salata, chief executive of Baring Asia, said in a statement that the investment will be used by China CBM to accelerate the development of coal bed methane as a clean energy resource, an area which has received limited investment thus far in China.
Baring Asia made the investment from its fourth fund, the target size for which is $1.5 billion. The investment makes Baring Asia the single largest minority shareholder in the company.
APOLLO FUND LINKS WITH AUSTRALIAN INVESTMENT BANK
Apollo Management's The Apollo Asia Opportunity Master Fund has taken a 20 percent shareholding in Perth, Australia-based investment bank Argonaut Limited.
The two firms have also entered a strategic alliance in relation to Argonaut's new merchant banking business, Argonaut Equity Partners. Argonaut Equity conducts operations in bridge, mezzanine and hybrid financing, special situations and principal investments.
Argonaut executive chairman Charles Fear expressed his enthusiasm in a statement that Apollo had chosen to partner with natural resource-focussed Argonaut for its first Australian venture.
“Argonaut provides Apollo with a strong presence in the natural resources sector and access to high quality technical expertise and Australian deal flow,” said Argonaut managing director Eddie Rigg in a statement.
The Apollo Asia Opportunity Master Fundisan Apollo Management-owned Asia-focussed investment fund. Apollo has over $41 billion (€26.7 billion) and is currently raising $15 billion for the Apollo Investment Fund VII according to the Probitas 2008 Private Equity Deskbook.
PROBITAS LOOKS TO ASIA, MIDDLE EAST
US fund advisory firm Probitas Partners plans to open offices in Asia and the Middle East within the next few months, sister website PrivateEquityOnline.com has learned.
Michael Hoffman, the firm's San Francisco-based co-founder, confirmed that Probitas is currently in discussions with candidates to lead each office. Hoffman declined to specify the cities in Asia and the Middle East in which Probitas will establish beachheads.
Though Probitas has offices in San Francisco, New York and London, Hoffman notes that Asia and the Middle East are clearly areas where the firm needs to expand its presence.
CHINESE INSURER WANTS PRIVATE EQUITY ACCESS
The chairman of China's largest life insurer, China Life, has asked the Chinese People's Political Consultative Conference to allow insurers to invest in private equity funds and make private equity-style investments, according to state-run publication The China Daily.
Access to the asset class would allow insurers to spread risk and more closely match the time horizons of their investments with their liabilities, said chairman, Yang Chao.
Yang submitted his proposal to China's top political advisory body during its annual conference in Beijing.
“An insurance industry investment fund, led by several big insurance companies, could be set up to propel their investment into quality unlisted companies and infrastructure projects,” Yang said in the proposal.
QUANTUM LAUNCHES INFRASTRUCTURE FUND
Mumbai-based Quantum Equity Advisors (QEA) has launched its maiden private equity fund, targeting commitments of $500 million (€319 million) to invest in Indian infrastructure.
Satish Mehta, managing director and chief executive of QAE, told PEI Asia that the firm is targeting limited partners mainly from North America and Europe, while hoping to attract a few investors from India and the Asia-Pacific region at a later stage. The fund is expected to close in six to eight months, he said.
The Q India Fund will invest in sectors such as logistics, ports, airports, health, power and tourism.
The fund's investment team is led by Nasser Munjee and Satish Mehta. Munjee was formerly a managing director at IDFC, one of India's largest infrastructure financing companies, while Mehta was formerly a managing director at Credit Information Bureau (India).
EX-3I MAN LEADS CANDOVER INTO HONG KONG
London-based buyout firm Candover has opened an Asia office in Hong Kong, having recruited Jamie Paton who set up 3i's North Asia office where he worked for seven years.
Paton arrives at Candover having left 3i last year to drive a camper van and surf his way around Australia now his children have grown up.
He said he was going to enjoy helping Candover find its way in the Asian market.
Said Paton: “There has been tremendous development in Asia over the last five years and there are a number of compelling macroeconomic factors which have produced strong results for a number of the private equity funds already in Asia.”
He said the office opening had been driven not only by the possibility of more deals, but by a push from a number of the Candover portfolio companies, which had Asian operations or were looking to strengthen their connections in Asia.
SEVEN-STRONG CHINA TEAM FOR BAIRD
Baird Private Equity has launched an investment team of seven in China, as the US mid- market firm prepares to make its first direct investments in Chinese companies.
The firm has been active in China since 2003, when it established a team of 20 operating professionals there to help its US and European portfolio companies with sourcing, manufacturing and distributing in Asia. The new investment team will work alongside the operating team out of Baird's offices in Beijing, Shanghai and Hong Kong.
The new investment team will be led by partners Hock Goh, Huaming Gu and Brett Tucker, as well as investment committee chairman Bruce Allen. Goh has been a Baird operating partner in China since 2004; Gu was previously a senior vice president at EQT Partners Asia; and Tucker was most recently a principal at Baird. Allen was previously chief executive officer of Hong Kong private equity firm AIF Capital.
The team will target small companies with high growth potential in the manufactured products, healthcare and business services industries, a continuation of Baird's strategy in the US and Europe. Baird plans to invest in companies with enterprise values of between $20 million and $75 million, a sector of the Chinese market that Baird believes is currently underserved.
MIZUHO CAPITAL CLOSES JAPANESE VENTURE FUND
The venture capital arm of the Mizuho Financial Group has closed Mizuho Capital Partners No.3, a $220 million (€140 million) venture capital fund for making investments in Japan. An official at the company stated that though the fund is focussed on Japan, a few investments will also be made overseas on an opportunistic basis. The firm has previously invested in China, Taiwan and the US.
This is the firm's largest fund to date. It received commitments from a total of ten Japanese limited partners, most of which were financial institutions including other divisions of the Mizuho Financial Group.
RABIH KHOURY LEAVES DIC
Rabih Khoury, the chief executive of Dubai International Capital's emerging markets arm, is leaving the company by mutual consent, according to a statement.
Anand Krishnan, the firm's chief operating officer, will act as chief executive of DIC Emerging Markets following Khoury's departure, and occupy the position on an interim basis until a successor to Khoury is appointed.