AGIC Capital, a $1 billion private equity firm founded by veteran China banker Henry Cai, has agreed to buy a majority stake in an Italian robotic company for more than €100 million ($113 million).
Joining the recent surge of Chinese investment in automation technology and looking to close its second European deal in less than six months, AGIC Capital said it is acquiring Gimatic, which makes robotic arms for handling plastic injection and moulded parts for auto industry suppliers.
"We hope to replicate its success stories in Europe into China," Heiko von Dewitz, managing director of AGIC Capital, told FinanceAsia in a phone interview, describing the Italian company as “highly profitable” and “cash positive.”
AGIC Capital's swoop for Gimatic comes after another Chinese group, home appliance manufacturer Midea, launched a $5 billion bid last month for German factory robot manufacturer Kuka.
These acquisitions are part of China’s ambitious plan to revamp its manufacturing base from a world-beating low-cost production centre into a global centre of excellence for innovation and high-quality goods. In its “Made in China 2025” blueprint outlined last year, the State Council said it plans to spend more than Rmb8 trillion ($1.3 trillion) over the next 10 years on 10 key sectors ranging from aerospace equipment and farming machines to transportation equipment and medical devices.
Such pro-industry policies and economic reforms have in turn contributed to a series of high-profile foreign forays by Chinese companies, including February's $43 billion mega offer by state-owned China National Chemical Corp (ChemChina) for Swiss seeds and pesticide maker Syngenta.
That was preceded in January by news ChemChina had teamed up with Cai’s fund and Guoxin International Investment Corp to buy KraussMaffei Group for $1 billion. The 178-year old German firm makes machinery for processing plastic and rubber, from carbon-fibre-reinforced components on BMW electric cars to insulating layers in Whirlpool refrigerators.
Founded in 1985, Gimatic, a privately-held company with 70 people globally, designs and manufactures robotic arms that help makers of car parts to produce bumpers, dashboard and other high-end plastics. The company is located in the city of Roncadelle, about 60 kilometres from Milan.
“Gimatic is in excellent condition today with high profit margins and unique business products to China’s automobile industry,” Munich-based von Dewitz said. “The speed of automation technology has increased at a very fast pace in China, where we see significant demand for highly engineering solution for handling complicated task.”
He added that Gimatic is in talks with domestic car makers Geely and Great Wall as well as Chinese operations of foreign car companies as it seeks to boost its overseas revenues. “Gimatic is open to any strategic partnership or joint ventures,” von Dewitz said.
Sales of robotic products to auto-part makers represent about 50% of its overall revenue, while the remaining half of the income is split evenly between electronics, pharmaceutical companies, and packaging. European countries, mainly Germany and Italy, account for 80% of sales currently, with the remainder coming from the United States and Asia.
He declined to give details of Gimatic’s Asia expansion strategy but said that AGIC Capital will help Gimatic to scale up its overseas business in China and Asia, thanks to Cai’s extensive business network in China.
"Our firm adopts a long-term investment strategy and we do not consider to sell the stake in Gimatic in a short period of time," he said.
AGIC Capital raised $550 million from a group of investors last year, including anchor investment from sovereign wealth fund China Investment Corp. It is expected to complete its second round of fundraising in August, for a total war chest of more than $1 billion.
Before becoming a private equity investor, Cai spent more than 20 years in the investment banking business in Asia, mostly helping China's state-owned companies to list their shares in Hong Kong, including the 1993 debuts of Shanghai Petrochemical and Tsingtao Beer.
He was most recently Deutsche Bank’s executive chairman of corporate finance for Asia-Pacific and left the bank in February 2015.
He plays an instrumental role in deal-making, offering foreign companies quick access to China and Chinese companies access to technological know-how through his overseas network of contacts.
China’s industrial robots will double to more than 400,000 in the three years to end-2017, surpassing the EU or North America, according to International Federation of Robotics, a trade group. In 2013, China overtook Japan as the largest market for industrial robots, with a fifth of global sales.