Cathay Capital raises €500m for Innovation II fund

The fund was launched in 2018 with a €500m target and €600m hard-cap, and held a first close on €320m in June 2019. The vehicle intends to continue its fundraising in the coming months, until hitting its hard-cap, the GP told Unquote.

The fund is larger than its predecessor, Cathay Innovation I, which closed on €287m in June 2017, exceeding its €225m target.

The GP has also closed its Midcap II fund, a vehicle dedicated to supporting the international expansion of mid-market companies in Europe, China and North America, on €800m.

Hervé Descazeaux, managing partner of Cathay Capital, said: "These two platforms operate in synergy and allow us to have a powerful strategy in both the startup space and the mid-market, and support innovating and disruptive companies, as well as more established SMEs with high-growth potential."

In addition, the GP also manages its Small Cap Fund III, which closed on €230m in 2018. Unquote understands that the fund plans to make two more investments in the coming months before closing its investment period; one in the healthcare industry and one in the digital services sector.

Founded in 2007, Cathay has completed 140 buyouts, growth and venture capital investments and manages €3.5bn in assets, distributed across a range of investment strategies and vehicles.

Investors
Cathay Innovation II built a wide and diversified LP base composed of previous investors, which re-upped to this second vehicle, and new institutional investors, according to the GP.

Its LP base includes previous investors BPI France, Groupe ADP, Groupe SEB, Michelin, Valeo and GL Events, as well as new partners including Accor, BioMérieux, Dassault, JCDecaux Holding, Kering and Pernod Ricard.

Geographically, the vast majority of its investors come from France and the rest of Europe, while the remainder are from the rest of the world, including Asia.

Investments
Cathay Innovation II targets startups operating in a wide variety of sectors, with a special focus on the digital transformation and the industrial revolution induced by artificial intelligence, with major and cross-cutting applications for retail, fintech, healthcare, transport and energy.

The fund supports startups in their industrial and commercial development during the scale-up phase. It invests in Europe (primarily across France and Germany), Asia (China but also south-east Asia via the group's new office in Singapore), and North America.

Cathay Innovation also intends to take into account in its investment strategy the sustainable development goals of the United Nations, in order to favour companies with environmental and social benefits that are offering solutions to the challenges of sustainable development, according to the firm.

People
Cathay Capital – Hervé Descazeaux (managing partner); Mingpo Cai (president); Denis Barrier (CEO of Cathay Innovation).

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