Fund focus: CMC widens its sweet spot

CMC Capital Group announced a final close of $950 million on its third US dollar-denominated fund just as coronavirus appeared to be coming under control in China but the outbreak was gaining momentum globally. The GP was fortunate that its fundraising process was largely completed by the end of last year.

"For funds that are still in the market, the process might be less efficient and the fundraising discussions will take longer," says Wei Choy Lee, a partner and COO at CMC. "You can do a lot remotely, but at some point, there need to be face-to-face meetings."

Nevertheless, he doesn't believe that the virus will impact China's long-term prospects. Some start-ups have suffered, while others in areas such as online education and grocery delivery are thriving. But it is too early to make calls on fundamental shifts in consumer behavior. "We have to wait and see where the large structural opportunities and growth trends are," Lee notes.

CMC – which was established in 2010 by Ruigang Li (pictured), formerly president of Shanghai Media Group – has surpassed $2.5 billion in assets under management with the close of Fund III. The firm raised $350 million for its debut US dollar vehicle in 2014 and $600 million for a successor fund in 2017. There are also two renminbi funds, each with a corpus of around RMB2 billion ($285 million), that closed in 2009 and 2017.

Fund I has already returned its principal to investors, with a full exit from IMAX China and partial exits from three more companies, including video-streaming platform Bilibili and video-sharing service Kuaishou. In all, the firm has made 53 investments since inception, achieving 15 full or partial exits. Eight portfolio companies have gone public.

Having started out as a media specialist, CMC now targets companies – based in China or with a strong China growth angle – across the media and entertainment, technology, and consumer spaces. Sub-sectors range from film and television to supply chains and logistics.

"We started with a deep focus on media entertainment. That focus is always there, but the long-term strategy is to turn CMC into a leading GP that can capitalize on innovative growth-stage companies," says Lee. "We don't play in the angel space. We need to see stability, sustainability and a mature business model before we invest."

CMC seeks to use its media expertise as a stepping stone into related areas, moving from content distribution to grocery distribution and from media marketing to deals that leverage changing consumption patterns. New retail and related infrastructure are logical targets. Recent investments include Hongjiu Fruit, a fresh fruit supply chain operator, and Perfect Diary, a color cosmetics brand now worth more than $1 billion.

Lee points to education is another natural extension from media, where CMC has backed the likes of Gaosi Education and Zhangmen. "We are becoming a specialist in more areas, we are not diluting ourselves," he says. 

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• Topics
• Greater China
• Fundraising
• Growth
• Media
• Technology
• Consumer
• China
• China Media Capital
• TMT