Shanghai Amara opens in Shanghai

The Middle East-backed firm plans to initially invest in China on a deal-by-deal basis, with an eye to raising sector-specific private equity funds in the future.

Shanghai Amara Equity Investment Management has opened an office in Shanghai led by Andy Lam, the firm’s chairman. 

The firm is a joint venture between Dubai-based Amara Holdings and Shanghai Ding Hai Investment Management, a subsidiary of trust fund company New China Trust. It is the first foreign-invested firm to register as a local entity in the Shanghai Pudong New Area, under a pilot policy unveiled this June. It will now be able to raise capital from local co-investors as well as from its shareholders, which are Middle Eastern Family trusts.

Investors from the Middle East are interested in investing in China as the financial crisis has partially diverted Middle Eastern money flows from the US and Europe into the country. However, they need a platform as well as good partners, Andy Lam, chairman of Shanghai Amara, said in an interview.

“It is a good time presently to enter the Chinese market. We are now speaking to people and companies, which may not have spoken to us two years ago due to a difference in price and returns expectations,” Lam noted.

Shanghai Amara has cooperative agreements with its co-investors, which are state-owned companies Lam declined to name. Being in a partnership with New China Trust enables Shanghai Amara to access its networks, while registering under the new policy allows capital to be raised from local investors, said Lam.

The firm will currently raise capital on a deal-by-deal basis although it will consider raising traditional sector-focused private equity funds in the future. It is primarily focused on the energy, agriculture, real estate and infrastructure sectors.

Shanghai Amara plans to invest approximately $400 million in the country by the end of 2009: it intends to invest around $100 million in a renewable energy company and is in talks to invest about $300 million in a mechanical parts maker, according to Lam.

The firm is also building its team ahead of its planned activities. Presently, its Shanghai office has four investment professionals. However, it intends to build a team of between 10 and 15 investment professionals by this October, Lam stated.

In addition to his role as the firm’s chairman, Lam is also the chairman and chief executive of Hong Kong-based investment firm Baron Assets Group. He is also a deputy chairman and executive director at state-owned conglomerate China Huaxin Group. His other roles include being a non-executive director and a senior advisor for overseas mergers & acquisitions at Beijing’s Dragon Life Insurance and being a senior advisor to the state-backed State Capital Market Research Centre.

Cairo-headquartered Citadel Capital is another firm which raised capital on an as-needed basis for deals when it was first set up and has now decided to raise a private equity fund. It is currently targeting $500 million for the MENA Joint Investment Fund.

Shanghai Amara is a unit of Dubai-based Amara Holdings, a Sharia-compliant investment fund, which is raising $200 million to target opportunities in China, the Middle East and India. The fund’s Gulf-based investors include Khalid Al Mukairin Group and Saudi Arabia-based Al Sorayai Group. It plans to list on London’s Alternative Investment Market.