Cathay holds €600m first close for Midcap II

The vehicle is expected to start investing in Q2 2018 and finalise the fundraising process by H1 2019.

The fund was officially launched in January with the signing of a tripartite memorandum of understanding between the China Development Bank (CDB), BPI France and Cathay Capital during French president Macron's official visit to China.

The fund's predecessor, Cathay's Sino French Midcap, held a final close in December 2014 on its hard-cap of €500m after six months on the road. The predecessor provided €15-50m tickets on average.

A spokesperson for Cathay said that, since the new vehicle has increased in size, Cathay Midcap II will provide larger tickets.

Investors
The fund is currently backed by Cathay's historical cornerstone LPs, CDB and BPI France, as well as a mix of sovereign funds, institutional investors and family offices.

In terms of the geographic location of LPs, Cathay's LP base is predominantly European, while Chinese LPs account for around one third of its current commitments, and US and Middle East investors have committed the remainder. A person familiar with the situation disclosed that the GP noticed an increased interest from UK investors in Cathay Midcap II's fundraising process.  

Cathay Midcap II is the first fund backed by the China-EU Co-investment fund programme. Established by the European Investment Fund and Silk Road Fund, the programme aims to develop collaborations between the Investment Plan for Europe and China's Belt and Road Initiative.

Investments
The vehicle will provide equity tickets of up to €100m, and up to €150m with co-investment.

Cathay Midcap II will continue to focus on the geographies traditionally targeted by Cathay: China, Europe (mainly France and Germany), and to a smaller extent North America. Targeted sectors will include healthcare, consumer goods and business services. Backed businesses must operate in sectors that facilitate high cross-border synergies between China and the west.

People
Cathay Capital – Ming-Po Cai (president, founder).

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