A Capital launches first outbound RMB fund

With a RMB3 billion ($456 million) target, European investment group A Capital will raise funds for the China Outbound RMB Fund from private and state-owned companies as well as other institutional investors based in Beijing. Deals are intended to be sourced in Europe, with a focus on technology, market-access and other branded targets.

As part of the deal, the Beijing Municipal Government will provide support to A Capital, giving it "preferential treatment" and offer the fund access to suitable LPs in Beijing. "China outbound investment is not a new concept, but we think these investments, around $60 billion last year, will grow by a multiple in the next years," André Loesekrug-Pietri, Chairman and Managing Partner of A-Capital, told AVCJ. He added that the fund's raison d'être was a desire by China to seek out European expertise and technologies, the rising costs of China's own production chain and the inherent difficulties Chinese investors have investing out of the PRC.

The Chinese government has made no secret of its ambitions to be a private equity hub, and has in recent months made further moves to liberalize the landscape to enable global PE players to do business in the market.

In October, Shanghainese regulators approved a pilot Qualified Foreign Limited Partners (QFLP) program to allow international LPs to invest into Shanghai-incorporated RMB-denominated PE funds. The scheme was implemented in January, and one month later, the Beijing government announced that it would adopt a parallel program. Firms such as Blackstone, Carlyle, KKR and TPG have formed relationships with governments in Shanghai, Beijing and, in the case of TPG, Chonqing to launch their multi-billion-RMB funds.

Yet, A Capital's outbound private equity fund strikes a unique chord, as it gives outside opportunities to those accustomed to working in RMB. "There has been a poor track record of Chinese outbound investments due to integration difficulties and cultural differences which makes Chinese investors and government prudent," Loesekrug-Pietri told AVCJ. "The fact that we coinvest is a strong sign of trust for them that the deal is an attractive one and that they will have a friend with the same interest."

A Capital has already launched a Euro fund dedicated to China-EU cross-border investments, and the firm's PIPE co-investment with PRC conglomerate Fosun in Club Méditerranée (Club Med) in June is said to act as a model for future investments from the outbound fund.

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• Topics
• Greater China
• Renminbi fund
• Fundraising
• CIC