Gen2, China Private Equity in partnership agreement

The CPE board said the partnership would combine Gen2's proven capabilities in China investment and risk management with CPE's specialist operational private equity experience and involvement with investee companies. As the collaboration matures, investors in Gen2's funds are also expected to benefit from the transparency offered by CPE's public listing

As part of the agreement, David Kiang, a senior advisor at Gen2, will join the CPE board as a non-executive director.

Under the terms of the memorandum of understanding, Gen2 will act as a strategic consultant to CPE. After one year, Gen2 will be granted an option over 750,000 ordinary shares in CPE at $0.25 per share, a 36% discount to the current net asset value of the company, to be exercised within three years.

Gen2 will receive additional payments on a case-by-case basis for introducing investment opportunities to CPE. Furthermore, it is likely that CPE will acquire certain assets from the Gen2 portfolio.

"We are delighted by the opportunity to work with CPE to develop a strong investment platform catering to the needs of European investors, and we are looking forward to reaping the benefits brought to Gen2 by our resulting exposure to the London markets," said Barry Lau, Gen2's managing partner.

Gen2 raised an open-ended mezzanine fund - the Asia Private Credit Fund - of $100 million in 2010, with a targeted IRR of 30%. It launched a Greater China-focused mezzanine fund in September and is seeking to raise $200 million, with a hard cap of $275 million. A first close is expected by the end of 2012.

Last month, CPE restructured its investment in Australian online trading platform Enfinium International Holdings by folding the stake into Hong Kong-based AIP Global. It received a minority interest in AIP in return.

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• Topics
• Greater China
• Mezzanine
• Europe
• Mezzanine
• China