Rothschild venture taps China private equity demand

Updated: 2011-04-01 11:14
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LONDON/HONG KONG - Financier Jacob Rothschild has launched a $750 million private equity fund to help Chinese investors to take part in international deals.

The new fund, capitalising on fresh economic reforms and appetite for overseas investment, will target investors from the newly-formed China International Chamber of Commerce for the Private Sector.

Rothschild's private equity venture RIT Capital Partners, and Chinese investor Creat Group will provide seed capital for the fund, hoping to raise some $650 million from other Chinese enterprises. It could be ready for investing from July, Rothschild told Reuters in a telephone interview.

The fund will give Chinese investors the chance to invest in overseas companies via an overseas private equity structure for the first time.

International private equity groups, such as Blackstone and TPG, have used onshore Renminbi-dominated funds to tap Chinese investors and take stakes in local firms.

"This unique venture will allow China's private sector to invest in Western companies, whilst providing opportunities for Western companies to enter China's rapidly growing and vibrant economy," said Rothshchild.

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The move comes as Chinese companies target overseas investments more aggressively, attempting to tap international markets for expertise and technology.

Bright Food Group is one firm to have launched bids for private equity backed businesses, including French yoghurt maker Yoplait, and Britain's snack food group United Biscuits.

It is not alone. Chinese cable maker Xinmao Group earlier this year failed with a $1.3 billion bid for Dutch company Draka Holding NV, while Geely Automobile Holdings last year purchased Ford Motor's Volvo unit.

The fund aims to take unleveraged minority stakes in international businesses across a wide range of sectors including technology, natural resources and luxury goods.

The new venture, J Rothschild Creat Partners, which also draws in boutique advisory firm Quercus Ventures, expects to launch other products for Chinese investors in due course.