Money
Outbound yuan fund may exit companies by listing in China
Updated: 2011-03-29 13:57
By Karen Yip and Cai Xiao (China Daily)
BEIJING - The first China-outbound renminbi fund may seek exit strategies in its invested companies by listing them on the stock exchanges in Europe, Hong Kong or the proposed international board on the Shanghai Stock Exchange, according to Andre Loesekrug-Pietri, chief executive officer and managing partner of European-owned private equity group A-Capital Asia.
The potential listings are seen as a platform to gain an edge in the huge potential of Chinese economy, he said.
"We hope to see more," he said, referring to the potential initial public offerings. This trend will be influenced by the increased outbound and inbound flows of funds and cooperation between Chinese and foreign investors.
The 3-billion-yuan ($457 million) fund, which aims to invest in European companies in technology sector, distribution channels and major brands, is a partnership between A-Capital and Beijing Municipal Bureau of Financial Work.
"Through the listing (in Hong Kong or the mainland), these foreign companies will raise their brand recognition among the local communities," he told China Daily.
Using the example of the Italian fashion house Prada's decision to list on the Hong Kong stock exchange, he said it's not far-fetched to see more foreign companies eyeing a listing in Hong Kong or the mainland.
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Listing shares in China has its advantages, including a higher valuation for the company when compared with a listing in New York or London.
Companies in the shipping, food, and luxury goods sectors stand a better chance of being listed in Hong Kong or mainland, he said, because of the shift in market forces that has now moved to China.
"Through this effective equity investment channel, fostering win-win strategic and equity partnerships between leading European and Chinese groups, we will boost the development of Chinese companies overseas, and secure the strong development of European groups," said Loesekrug-Pietri.
The Beijing Municipal Government will provide A-Capital with access to leading private and State-owned companies in Beijing, as well as to major institutional investors in the Chinese capital.
Outbound investments by Chinese companies face many challenges, including being unknowns in the overseas market, and a cap on a free-flow currency exchange that could hinder investment decisions.
A-Capital originated a new model for Chinese outbound investments with the landmark Fosun-Club Med transaction in 2010, the first-ever Chinese investment into a global brand to support its domestic growth.
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