CCTV-2 feature program Diversified Overseas Investments by Chinese Enterprises—Private Equity (PE) Fund Bolsters Overseas M&As by Private Enterprises On Feb. 27, 2012
In view of Mandarin’s tremendous contribution to supporting excellent Chinese enterprises “Going Global” and its prestige in private equity investment, CCTV journalist made a special trip to the Shanghai office of Mandarin Capital Partners and had an interview with Managing Partner Gao Zhen to explore the road to diversified overseas investments by Chinese enterprises.
Since last year, tightened monetary policy and profitability uncertainties on the secondary market, have imposed multiple daunting challenges on China’s SMEs in financing, which calls for PE fund to play more important role in backing their overseas M&A deals.
Besides impressive overseas M&A deals by some powerful state-owned enterprises, more and more private enterprises are involved in this field by drawing strength from PE funds, with dramatic growth in such key indicators as fundraising amount, return of investment and industries.
As analysts pointed out, for Chinese enterprises who are inexperience in overseas M&A procedures and post-M&A management, PE fund will be a great partner. It’s foreseeable that more and more Chinese enterprises will join hands with PE fund for overseas acquisition. PE will exit in three to five years to return the controlling power back to the enterprise pursuing overseas listing of the acquired entity.
“In contrast with several years ago when large-scale state-owned enterprises dominated the overseas M&A market, over the past two or three years, private enterprises have gained the lion share and expanded their target industries. More and more ambitious Chinese enterprises aim to globalize their business and secure competitive edge through overseas M&As,” said Managing Partner Gao Zhen of Mandarin Capital Partners.
Gao Zhen said, the investment targets of PE funds have also diversified. For example, many small-sized medial equipment suppliers in Europe as well as healthcare and medical service contain great investment potential. So far, Mandarin has accumulated a large pool of promising projects.
After the interview, Gao Zhen discloses that Mandarin will launch the second PE fund this year with the target fundraising amount of €1 billion, higher than original amount.
Mandarin recently announced that it had sold its stake in Euticals to Italian PE fund Clessidra, securing three times of return on this project, hitting an all-time high in both amount and return by the equity fund involving Chinese share-holding institutional investors.
Mandarin Capital Partners is the largest Chinese-European private equity fund. Its main investors and sponsors are 22 renown institutional investors, with the total amount under management close to €328 million. Mandarin is dedicated to fields benefited both China and Europe, including advanced manufacturing, pharmaceuticals and healthcare, high-end consumer goods etc. Mandarin has invested 10 projects in pharmaceuticals, medical service, advanced manufacturing and others.