Citic closes $425 million private equity fund

Citic Capital Partners closed its maiden China private equity fund raising $425 million against a target fund raising of $250 million, confirming once again that investors in private equity are very bullish on opportunities in China.

ôInvestors in the fund were evenly spread across five main geographies: Japan, the US, Europe, Southeast Asia and the Gulf,ö says Brian Doyle, managing partner, Citic Capital partners. ôThe tenure of the fund and the holding period are pretty standard and in line with industry practice,ö says Doyle.

The fund will concentrate on buy-out and privatisation opportunities in established and profitable Chinese companies. The focus will be on companies in the consumer products and manufacturing sectors. Doyle says: ôTarget investment size is upwards of $20 million and I expect we will make 8-10 investments.ö

In 2005, Citic Capital Markets partnered with Warburg Pincus to acquire 45% in Harbin Pharmaceutical Holding, the holding company for Harbin Pharmaceuticals. A local Chinese fund acquired 10% and the government of Harbin city continued to hold the balance 45%. Harbin is a primary manufacturer of traditional Chinese medicines with a well-entrenched distribution network. Specialists say Harbin Holding raised $251 million through the sale of the 55% stake. The investment is the anchor investment in the new fund.

ôWe will be adding more people pursuant to this closing,ö says Doyle. Citic Capital Partners already has 15 people at its Shanghai office.

Citic Capital Partners manages a total of $750 million of capital including this fund and two other buy-out funds, Citic Japan, a mid-market buy-out fund and Citic Equity partners II, a US mid-market buy-out fund.