AGIC closes Asia-Europe fund at $1b

The firm – previously known as Asia-Germany Industrial Promotion Capital – was set up by Henry Cai, formerly executive chairman of corporate finance for Asia Pacific at Deutsche Bank. The fund launched in March 2015 and a first close of $550 million was announced in October of that year. It was previously reported that China Investment Corporation (CIC) is an anchor investor in the vehicle.

AGIC’s first deal came in early 2016 when it teamed up with China National Chemical Corp. (ChemChina) and Guoxin International Investment Corp. to buy KraussMaffei from Onex for EUR925 million ($1.01 billion). It then acquired a majority stake in Italian robotics supplier Gimatic for an enterprise valuation in excess of EUR100 million, working with the company’s CEO and existing investor Xenon Private Equity.

The private equity firm focuses on small and mid-cap companies in Europe that specialize in intelligent manufacturing, high-end equipment, advanced materials, medical technologies, and environmental protection technologies. The goal is to connect these companies with industrial producers in Asia – particularly China – that can use the technology to improve their operational efficiency. Investments typically fall in the $20-100 million range, with both minority and control positions considered.

AGIC will open an office in London in the first quarter of 2017, complementing its existing operations in Munich, Beijing, Shanghai and Hong Kong.

“The success of the fundraising reflects their endorsement of our investment philosophy and recognition of our track record to date. We will continue to act as the bridge for European companies with advanced technologies, particularly in Germany, Austria, Switzerland, Italy, France and the Nordics, helping them tap into the exciting opportunities in China and across Asia,” Cai said in a statement.

He added that demand for technology products in China is growing fast, driven by the country’s economic reforms and by massive investments into upgrading its industrial infrastructure.

Indeed, China’s non-financial outbound direct investment rose 44.1% year-on-year to reach $170 billion in 2016, with technology and high-end manufacturing of particular interest. Investment in Germany alone topped $10 billion for the first time – five times the previous annual high – with the EUR4.5 billion acquisition of robotics player Kuka prompting concerns about the scale and nature of Chinese M&A.

The Ministry of Commerce said this week that outbound investment will likely slow in 2017 as more emphasis is placed on the quality of deal flow. Restrictions on capital outflows imposed towards the end of 2016 have already slowed activity. The ministry added that it will support authentic and legal deals pursued by capable and qualified investors.

Speaking to AVCJ after the KraussMaffei deal closed, Cai highlighted the challenges Chinese companies face when making acquisitions in markets like Germany. "First, there is a different culture and investment philosophy. Then you have to deal with German companies' concerns about patent protection and whether the Chinese investor is going to shut all the plants in Germany. We know how to get access in Germany, this is unique knowhow and IP,” he said.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Europe
• Fundraising
• Industrials
• Technology
• AGIC Capital
• China
• GPs