Eurazeo holds €400m first close for France-China Cooperation Fund

Alessia Argentieri
03 June 2020

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Eurazeo has held a тЌ400m first close for the France-China Cooperation Fund, launched in partnership with BNP Paribas and China Investment Corporation (CIC).

The vehicle has a final target of €1-1.5bn. Eurazeo will be responsible for directing the fund's strategy, selecting its investments and managing the portfolio.

This project was initially announced in March 2019, with a memorandum of understanding and a subsequent letter of intent signed in the presence of Presidents Xi Jinping and Emmanuel Macron.

"In addition to the connections across the Asian market provided by the China Investment Corporation, the fund's portfolio will benefit from the expertise of our team of 10 professionals based in Shanghai," Eurazeo managing partner Frans Tieleman told Unquote. "This, in today's travel-constrained environment, represents a powerful advantage and allows us to leverage the operational expertise of our local team in support of our companies."

Euronext Paris-listed GP Eurazeo is currently managing Eurazeo Capital IV, which held a final close on its €2.5bn hard-cap in July 2019. Out of the total amount raised for the fourth-generation fund, Eurazeo provided €1.8bn via its balance sheet, while third party backers committed €700m.

The fund targets European and US-based mid-market companies, operating in the consumer, business services, technology services and healthcare sectors, with valuations in the €500m-1bn range. It writes equity tickets of €200-400m.

In addition, the GP is currently investing a mid-cap vehicle, Eurazeo PME III, which closed on €658m in July 2017, and Eurazeo Growth Fund III, which invests from series-C onwards in companies with a proven business model that can maintain strong organic growth for many years.

Investors
The capital raised for the fund's first close was underwritten entirely by BNP Paribas, CIC and Eurazeo.

The three partners may commit up to an additional €250m to the fund, within a limit of 25% of the fund for each of BNP Paribas and CIC. Additional capital may also be raised from third parties and other investors.

"We expect to bring this investment opportunity to our existing LPs first," said Tieleman. "Then, we hope to broaden our investor base with the addition of other partners, building a wide and diversified pool of LPs. The LP market is experiencing an inevitable slowdown as a result of the coronavirus outbreak. However, our fundraising has been very successful and we are confident that we will be able to raise additional capital in the coming months."

Investments
The France-China Cooperation Fund will invest in French and continental European companies aiming to open new pathways for growth in China. Target companies are expected to be active in sectors with significant opportunity in China and where Eurazeo has an established and strong track record, including advanced industrials, business services, consumer goods and services, healthcare, and digital technology.

"This fund will invest alongside the existing strategies of Eurazeo Capital and Eurazeo PME," Tieleman told Unquote. "This synergy gives the fund the opportunity to seek investments across a wide range of market segments, targeting companies with EVs of €50-250m when investing alongside Eurazeo PME, and in the €250m-1.5bn range when co-investing with Eurazeo Capital."

The fund is actively seeking new investment opportunities alongside Eurazeo's mid-market buyout strategies, Eurazeo Capital and Eurazeo PME.

The fund will benefit from CIC's support of its portfolio companies in facilitating their entry and development in the Chinese market; BNP Paribas's presence and network of contacts in France and the rest of Europe; and Eurazeo's private equity expertise and track record in growing businesses internationally, particularly through its local presence in China since 2013.

People
Eurazeo – Virginie Morgon (CEO).