London Asia Capital has launched a £50m fund targeting opportunities in China. London Asia Chinese Private Equity Fund will seek an AIM listing in the coming months, and will focus on Chinese business in need of capital in order to expand, or those that intend to float on the capital markets.
The firm has already drawn up a shortlist of potential investments worth £150m, sourced from its teams in seven offices across China. The fund will concentrate on companies that are profitable, cash flow positive and have potential for high profit growth.
The sector focus includes energy and environment, financial services, TMT, education, pharmaceutical, chemical and consumer products sectors. Exits will typically be sought 12 to 36 months after initial investment. Investment proceeds will be reinvested in the fund.
Simon Littlewood and Victor Ng, directors of London Asia Capital, have been appointed to the board of the fund. London Asia will receive an annual fixed fee of 2% of the fund’s net asset value, plus a performance-related fee based on the increase in the net asset value each year.
China is regularly touted as one of the hottest emerging markets (along with India) for private equity. China has seen average GDP growth of over 8% per annum since 1979, and despite a significant number of assets still under state control, 60% of GDP is now generated by the private sector.