AGIC closes PE fund at $1b, seeks deals

Henry Cai's private equity fund is tapping Chinese and Asian demand for European small- and mid-caps with a technology focus and ambitions to expand into Asia, its MD says.
Medical technology is one of the target sectors for AGIC's new strategy
Medical technology is one of the target sectors for AGIC's new strategy

Germany’s AGIC Capital has closed its first private equity fund at $1 billion, with most of that raised from institutions in Greater China, underlining the region's demand for European technology-related corporates.

AGIC, founded by veteran Asia dealmaker Henry Cai, could have raised the hard cap and brought in more capital, but it wanted get on with deploying the assets, said Wolfgang Seibold, partner and managing director. Besides Greater China, the fund received commitments from Europe and elsewhere in Asia, he added.

Tech focus

The fund invests in European small- and mid-cap companies in high-end manufacturing and medical and green technologies, with the aim of helping them expand into Asia, with a focus on China.

Good tech companies in Europe are in general valued at more reasonable prices (around 10-14 times Ebitda) than those in Asia (often 50 times or above), Seibold noted.

The typical equity ticket size per deal will range from about $30 million to $200 million, but it can invest up to €1 billion ($1.1 billion) in partnership with others, he added. “AGIC can take majority or minority stakes, and we are looking at two to three new deals this year."

AGIC’s target sectors comprise intelligent manufacturing, high-end equipment, advanced materials, medical technologies and environmental protection technologies.

“The demand for technology products in China is growing fast, driven by China’s economic reforms and by massive investments into upgrading its industrial infrastructure,” Cai, chairman of AGIC, in a statement.

US-based BlueRun Ventures is a venture capital firm with a similar strategy of investing into technology companies – in this case in Japan and Korea – with a view to transferring their expertise and knowledge to China. 

Mid-cap demand

AGIC started fundraising in March 2015 and reached a first close of fundraising at $550 million in August 2015. It completed the final close in December 2016.

It worked with two Chinese state-owned enterprises on the $1 billion acquisition of German machinery maker KraussMafei in January 2016 and swooped for a majority stake in Italian robot maker Gimatic in June.

All the commitments came from institutional investors, including sovereign wealth funds, pension funds, insurance companies, large corporates and asset managers. AGIC will cater to co-investment requests from its LPs, noted Seibold.

The firm will open an office in London in the first quarter, with a view to sourcing more European investors, especially in Switzerland, Austria and the Nordic countries, Seibold said. That will bring the firm’s offices up to five, with the others being Munich, Beijing, Shanghai and Hong Kong.

The relatively quick fundraising progress reflects the high demand seen for mid-sized buyout funds of late. Last year saw 48 vehicles raise a combined $41 billion globally, a post-2008 financial crisis record, according to research house Preqin.

Overall, Asian institutional investors are showing strong appetite for private equity, as Preqin noted. However, LPs are growing increasingly selective and sophisticated in respect of the funds they want to invest in, Seibold said. “There are a lot of funds out there, so there is a lot of competition for capital.”

Globally the number of PE funds in the market is at a record high of 1,865, according to Preqin.

¬ Haymarket Media Limited. All rights reserved.
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