Europe's Eurazeo promotes Asian agenda

CIC has launched a string of similar vehicles as it steps up its private equity co-investment and direct investment activity, typically working with international financial partners to target China-related deals in certain geographies. The France-China Cooperation Fund, which has an overall target of EUR1 billion, will be managed by Eurazeo, building on the team’s existing knowledge of taking European companies into Asia.

"We will invest in European medium-sized companies and create value here in China. There are many European businesses that have strong China opportunities. CIC has several bilateral funds for international investment, while one of our strategies at Eurazeo is to help companies expand globally and China is an area of focus,” said Eddie Chen (pictured), Eurazeo’s Asia head, who has led the Shanghai office since its formation in 2013.

The firm, which had EUR18.8 billion in assets at the end of 2019, including EUR10.2 billion in private equity, has yet to make a direct investment in Asia. However, Chen’s team is busy helping non-Asian portfolio companies establish themselves in the region through organic expansion and M&A.

The coronavirus outbreak is now dominating the agenda, having spread from China to global markets. When Chen spoke to AVCJ last week – as infections in Europe were beginning to escalate at a faster rate – Eurazeo’s deal pipeline was largely unchanged. It remains to be seen what the coming months will bring. In China, though, the firm has been dealing with the fallout for some time.

“The China and Asia team has been working with portfolio companies since the end of January, trying to gauge the impact – whether there will be any delays to business, how long it will take to get back to normal,” Chen said. “We can only prepare and make sure that when the market picks up our companies are able to provide quality services.”

Eurazeo’s two most recent bolt-on acquisitions in Asia – by Iberchem, a global fragrance manufacturer headquartered in Spain – closed last December. The private equity firm paid EUR270 million for 70% of Iberchem in 2007 and immediately looked at M&A options. This led to the purchase of Versachem, a South Africa-based food flavors and colors specialist, in 2018. Flavors – which account for just 20% of Iberchem’s overall business – were also targeted in Asia.

“When we became the largest shareholder in Iberchem there was already a manufacturing operation in China mainly focused on fragrances,” said Chen. “On sitting down with the management team and discussing value creation and future growth for Asia, we concluded that there were opportunities in the flavor space.”

They duly bought Flavor Inn Corporation, a Malaysian company that primarily serves Southeast Asia, and China-based Nanchang Duomei Biotech. The immediate goal is to consolidate Iberchem’s position in a highly fragmented local market – Chen estimates there are over 1,000 small and medium-sized enterprises in the flavors space in China – and then scale up manufacturing in these markets to support global sales.

“We will continue to look for additional bolt-on opportunities that enlarge our scope and market share. We want to develop our position in the flavor market while growing our core fragrance business,” Chen added.

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• Topics
• Greater China
• Europe
• Investments
• Industrials
• Eurazeo
• China
• Asia