CDB forms $189m cross-border fund with France
China Development Bank (CDB) has teamed up French state-owned bank Caisse des Dépôts to create a EUR150 million ($189 million) fund to promote the international expansion of French and Chinese small- and medium-sized enterprise (SMEs). Each party will commit EUR75 million to the vehicle, which will be managed by Cathay Capital, a Sino-French PE firm focuses on cross-border growth deals.
The fund will invest equally in French and Chinese companies with annual turnover of EUR10-200 million. CDB and Caisse des Dépôts will commit their capital through subsidiaries CDB Capital and CDC Entreprises, respectively.
"The launch of this fund materializes the closeness between our two institutions," Xuguang Zhang, president and executive director of CDB Capital, said in a statement. "We have great ambitions for this partnership and are confident of its success, given the respective qualities of French and Chinese companies."
Mingpo Cai, president of Cathay Capital, added the private equity firm won the mandate based on ties with CDC Entreprises that date back to its inception.
Cathay manages EUR70 million through Cathay Capital I, which has been fully invested through 18 transactions across France and China in the last four years. It is also raising and investing Cathay Capital II, which held a first close in May last year at EUR125 million. The new fund is dedicated to growth equity investments in medium-sized businesses.
The majority of outbound deals in China have been driven by state-owned enterprises (SOEs), with the likes of CDB, Export-Import Bank of China (ExIm Bank) and provincial government bodies featuring strongly.
In 2007, CDB launched the $5 billion China-Africa Development Fund to make equity investments in African projects developed by Chinese enterprises in sectors such as agriculture, manufacturing, energy, transportation and telecommunications.
The state-bank - alongside its peer the ExIm Bank - also invested in Mandarin Capital, which closed its maiden fund in 2007 at EUR327.75 million, targeting investments in China and Italy. The Sino-European private equity firm is currently nearing a EUR500 million first close for its second fund, which has an overall target of EUR1 billion.
In February, the Shanghai city government joined the outbound club by launching a cross-border private equity fund with a target of RMB50 billion ($8 billion). It will be the largest international renminbi-denominated vehicle ever created.
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