China Merchants entity plans third fund in three years

Formerly named CMTF Asset Management Ltd., the unit was formed in 2007 to operate asset management businesses drawing on the strong network picked up from its shareholders, including China COSCO Group, China Shipping Group, China Communication Construction Group and China Merchants Group.
 
With operations in Hong Kong, and now managing a total of $85 million through its debut CMTF Private Equity One and CMTF Private Equity Two funds, CMS expects to raise its third fund with a target size of $200-300 million, and will have a special focus on investing in agriculture and food-related business in Greater China. Alongside the investment team comprising six professionals, the firm is allied with the China Academy of Agricultural Sciences (CAAS), the China national agricultural research organization directly affiliated to the Ministry of Agriculture, and Beijing Chimo Agricultural Development Centre, a non-profit research institution dedicated to agriculture research and development.

The official name of the fund has yet to be decided, but the firm will start fundraising activities from the middle of this year, and has indicated that so far it has received great responses from potential investors, including existing LPs of its currently operating funds and other institutional investors. The fund will be raised from various offshore markets, including the US, Europe and Asia.  

To find out more about the prospects for this unique and specially-themed fund, AVCJ spoke to CMS’s investment team executives, including Ray Feng, executive director, Vincent Phen, investment manager, and Charles Chen, assistant investment manager.

“After 25 month from our establishment, we have been able to deliver sound returns to our investors, many of them interested in our new fund,” said the team. Feng noted, “What differentiates us from other private equity firms is that we are a full financial service provider, offering various services, from research and M&A services to underwriting services for IPOs.”

The fund will target acquiring minority stakes in companies with investment size between $10-50 million per single dea,l with holding periods of three to five years, in growth and expansion stages.

As China sustains its GDP of 8.7%, foreign investors and business operators are looking at further business opportunities within the PRC. Reportedly, some $167 billion of “hot money” flowed into the PRC in 2009 from outside the region.

Agriculture focused-private equity fund is not really a mainstream proposition for GPs or LPs at this stage, but Phen explained, “Due to macro drivers such as urbanization, rising incomes and an emerging middle class, agriculture and food-related businesses will be one of the hottest areas in the decades ahead.”

Chen said, “Our team members are formed by ex-senior government officials in the agriculture sector, personnel with agriculture academic backgrounds, and experts from the financial industry. We believe that we can generate synergy by combining this great team with the strong networks of China Merchants.”

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• Topics
• Funds
• Fundraising
• Greater China
• People