CITIC Capital RMB fund backs China’s SF Express

CITIC Capital will invest through its debut renminbi-denominated fund - CITIC Capital (Tianjin) Equity Investment Partnership. The fund held a first close of RMB3 billion in 2011 and counts the National Council for Social Security Fund among its LPs, according to AVCJ Research.

"We are excited about this superb transaction which allows us to work closely with SF Express and share the promising growth opportunity it offers as it expands on its existing successful franchise, and diversifies into new business areas that are in line with the growth of the Chinese economy," said Yichen Zhang, chairman and CEO of CITIC Capital.

CITIC Capital manages $4 billion across various alternative investment funds. It is owned by China Investment Corporation, China's sovereign wealth fund, and Chinese conglomerate CITIC Group. Oriza, formed in 2001, oversees RMB21 billion ($3.43 billion) in assets.

Founded in 1993, SF Express has built a nationwide logistics network, including Hong Kong, Macau, and Taiwan. It has also been expanding overseas and now reaches into South Korea, Singapore, Malaysia, Japan and the US.

According to KPMG, there are more than 10,000 players in China's express delivery industry, and the eight largest are dominant.

With the exception of China Post-owned EMS and SF, the leading express companies follow a franchise model. It is an obstacle to integration and there have been complaints of inconsistent service and poor quality control. For PE investors able to offer management and IT expertise, this can be an opportunity.

SF has drawn interest from private equity before, but industry participants previously told AVCJ that they held little hope of investing. "The company appears to have no need to raise new funds and therefore no incentive to give up equity," one fund manager said. "It is expected to go public in Hong Kong soon."

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• Topics
• Greater China
• Renminbi fund
• Expansion
• China
• CITIC Capital
• Growth capital
• Logistics