Cathay closes second mid-market fund at $860m
Cathay Capital has closed its second middle-market fund, which invests in China, Europe and North America, with EUR800 million ($860 million) in commitments. The original target was EUR1.2 billion.
The private equity firm raised EUR500 million for its debut fund in the series in 2014. The successor, Cathay Midcap II, was launched in 2018 during French President Emmanuel Macron’s official visit to China. A first close of EUR600 million came in July of that year.
The fund is backed by China Development Bank, Bpifrance, and a mix of sovereign funds, institutional investors, and family offices. It is also the first vehicle supported by the China-EU Co-investment Fund, which was established by the European Investment Fund and the Silk Road Fund to support China’s One Belt One Road infrastructure initiative.
Cathay has described its target sectors as those with high cross-border synergies between China and the West that stand out in terms of sustainable growth potential. Investments are expected to cover healthcare, consumer goods, and business services. The core geographies are China, France, and Germany, while a small allocation will be considered for North America.
The private equity firm also announced that its second innovation fund, which supports start-ups in China, Europe, and North America, has already reached the EUR500 million target. This follows a first close of EUR320 million last June. Fundraising for Cathay Innovation II continues, with Mingpo Cai, the firm's co-founder expecting to accumulate around EUR600 million in total.
LPs in the innovation fund include Bpifrance, Groupe ADP, Michelin, hotel operator Accor, JCDecaux Holding – the investment office of the Decaux family – and beverage maker Pernod Ricard.
Cathay raised EUR287 million for the first innovation fund in 2015. The vehicle is said to have achieved a net multiple of 2x, having invested in the likes of Pinduoduo, Chime, Momenta, Glovo, Drivy, IfChange, Aqara, KaiOS, Ledger and Owkin.
The private equity firm specializes in cross-border investments with a focus on North America, Asia, Europe, and Africa. It manages EUR3.5 billion across 12 funds, including eight PE vehicles and four VC vehicles. Within the venture capital strategy, there are two renminbi-denominated funds - one for automobiles and one for smart energy.
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