Fund focus: Asian LPs back AGIC’s cross-border proposal

From an LP perspective, AGIC Capital’s debut Asia-Europe fund is very much a local affair. The vehicle achieved a first close of $550 million last year – less than nine months after launch – thanks in part to China Investment Corporation (CIC) coming in as an anchor LP. Last week, the GP announced a final close of $1 billion, having received commitments from Asian LPs including pension funds, insurance companies and corporates.

“The AGIC approach is quite differentiated and therefore attractive to our investors,” says Heiko von Dewitz, the firm’s Munich-based managing director. “We have a very stringent sector focus on the industrial technology and healthcare. Meanwhile, our cross-border set-up will help European companies take advantage of the Asia growth opportunity, especially in the China market. This resonates very well with both our target companies and LPs.” 

Previously known as Asia-Germany Industrial Promotion Capital, the firm was set up by Henry Cai, formerly executive chairman of corporate finance for Asia Pacific at Deutsche Bank. It focuses on small and mid-cap companies in Europe that specialize in intelligent manufacturing, high-end equipment, advanced materials, medical technologies, and environmental protection. The goal is to connect these companies with businesses in Asia that can use the technology to improve their operational efficiency.

Investments typically fall in the $40-200 million range, with both minority and control positions considered. For large transactions – with enterprise valuations of up to $600 million – the GP plans to bring in LPs as co-investors.

“That’s a very practical set-up because that gives us a lot of flexibility. It’s well-tailored to companies that have strong and proven technology and are already leaders in their respective industries. These companies have achieved a certain business size and we need to address the opportunity in terms of the ticket size,” says von Dewitz.

AGIC completed its first investment last year, partnering with China Chemical Corporation (ChemChina) and Guoxin International in the acquisition of machinery supplier KraussMaffei Group at an enterprise valuation of EUR925 million – at the time the largest Chinese investment in Germany. It subsequently bought a majority stake in Italian robotics supplier Gimatic at a valuation in excess of EUR100 million.

Two or three more deals are expected to close by the end of this year. Von Dewitz says regulatory scrutiny of Chinese strategic buyers in Europe has eased somewhat, while there Europe-based companies remain very keen on expanding into Asia.

“Asia has become a very large market in terms of healthcare and technology and we’ve had some productive early discussions with large Western investors that recognize the opportunity presented by our cross-border set-up,” he adds. “So we’ll be in a good position when we raise Fund II.”

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• Topics
• Greater China
• Europe
• Fundraising
• Buyout
• Technology
• Healthcare
• AGIC Capital
• China