PSource plans China infrastructure fund

London-based fund manager and consultancy PSource Capital plans to set up a fund to invest in Chinese infrastructure, as private equity funds increasingly look East for new investment opportunities.

PSource CEO Soondra Appavoo told Reuters that the fund is expected to raise hundreds of millions of dollars from a Chinese investor, which he declined to name, but was doing due diligence on PSource. Appavoo added that the fund could be launched within months.

An increasing number of hedge funds and other investment firms are opening offices in Asia or launching new funds focused on the region on the back of a strong rebound from markets last year and what they view as attractive investment opportunities.

“In China, there’s been no recession,” Appavoo told Reuters in an interview. He added that talks on the fund had been underway for years.

“It’s the world’s biggest infrastructure market and will be for the next 10 or 20 years,” he said. “In an economy that needs to grow super-fast returns will be high. And it’s a stable economy.”

Appavoo said the fund would team up with Chinese construction company Pacific Construction, for whom it would provide capital on less than 10 projects, such as roads, bridges or tunnels. The institution will invest “a couple of hundred million dollars” into the unlisted fund, he said.

Other funds have spied opportunities in Chinese infrastructure, such as JP Morgan Asset Management, which has invested almost a quarter of its $860 million Asia infrastructure fund in China and India assets. —Laurence Fletcher, Reuters