AGIC reaches $550m first close on China-Europe fund

AGIC is headed by Henry Cai, formerly executive chairman of corporate finance for Asia Pacific at Deutsche Bank. Cai has helped numerous Chinese companies, including Tsingtao Brewery and China Pacific Insurance Group, to IPOs in Hong Kong. Cai told The Wall Street Journal that China Investment Corp (CIC) is an anchor investor in the fund.

AGIC is targeting a total fund size of $1bn and will focus on investments in the Mittelstand – small and mid-size companies in Germany, Switzerland and Austria – in the technology and manufacturing sectors. The goal is to connect these companies with industrial producers in China that can use the technology to improve their operational efficiency.

Investments by Chinese GPs in German companies are not unprecedented. In 2012 CITIC Private Equity helped Chinese construction equipment manufacturer Sany Heavy Industry to acquire German concrete pump maker Putzmeister Holding, with CITIC retaining a minority stake.

AGIC will not focus on control deals and instead will seek a minimum 30% stake in its investee companies. The GP favors this approach due to the expected difficulties in acquiring tightly held German companies outright. Up to a third of the fund may be used to pursue the same strategy in other European countries besides the German-speaking areas.

Cai formed AGIC earlier this year after leaving Deutsche Bank. The firm has offices in Hong Kong, Beijing, Shanghai and Munich, and its staff includes former executives from The Carlyle Group, EQT and One Equity Partners.

This article was originally published by unquote" sister title AVCJ.

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