CVC invests $255m in China toll road operator

The PE firm will take a 25% stake in RKE, according to a regulatory filing, with the goal of supporting the company as it expands its operations in China and other countries covered by the Chinese government's One Belt One Road initiative, particularly in Southeast Asia. RKE currently manages a portfolio of five expressways in China, collectively accounting for 340 kilometers of toll roads in important economic corridors across four provinces.

Following the investment, RKE will continue to operate as a subsidiary of RKI, while CVC will gain a seat on the company's board. Apart from its toll road operations, RKI is also engaged in developing residential apartments, with a total of 8.33 million square meters under development.

For the year ended December 2017, RKE recorded HK$1.3 billion in revenue, up from HK$1.2 billion the year before; over the same period RKI's overall revenue dropped from HK$18.1 billion to HK$16.1 billion. RKE's net profit grew from HK$388 million to HK$452 million over the year, while RKI net profit rose from HK$1.4 billion to HK$2.5 billion.

CVC invested from its fourth pan-Asian fund, which closed in 2014 at $3.5 billion and invests in businesses that benefit from increased consumer affluence and domestic demand in China, Southeast Asia, Japan, and Korea. The firm is planning to launch a successor vehicle in September with a target of $4 billion.

Last year CVC appointed Sigit Prasetya to head its Asia team as part of a broader restructuring of senior management that saw Brian Hong become co-head of Southeast Asia and Hans Wang picked to head Greater China and the regional team. Current regional managing partner Roy Kuan is scaling back his involvement in the firm in preparation to retire.

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• Topics
• Greater China
• Infrastructure
• Expansion
• Hong Kong (China)
• CVC Capital Partners