Global alternative asset manager, Investcorp, will join forces with Fung Capital (“Fung”), the private equity investment arm of Fung Investments, the Hong Kong headquartered private investment office of the families of Dr Victor Fung and Dr William Fung, to invest in mid-cap companies across China’s Greater Bay Area (“GBA”) encompassing the Guangdong Province and the two Special Administrative Regions of Hong Kong and Macau. The GBA boasts a large number of innovative, growing and profitable private enterprises and present a highly attractive investment destination. It is currently expected that once established the fund will be operated out of Hong Kong.
The upcoming $500m fund was announced in Riyadh on the first day of Saudi Arabia’s flagship Future Investment Initiative. The fund will represent the fourth venture between Investcorp and Fung combining Investcorp’s 40 years of global private equity investing and operational value creation expertise with Fung’s more than 115 years of successful commercial history connecting Asia with the rest of the world through trade.
The fund will engage in privately-negotiated equity or equity-linked investments in growing and profitable companies based in or with nexus to the GBA. While being sector-agnostic, the fund will primarily focus on control buyouts of mid-cap enterprises with proven profitability and strong growth potential.
“We are proud to announce this new fund on the first day of FII with our partners Fung Capital, which is part of the Fung Group that has over a century of operating expertise in China and a strong GBA ecosystem. The GBA is a globally competitive industrial and technology cluster and there are strong fundamentals that single out the GBA ecosystem. There is big potential, particularly, for GBA-centered mid-cap companies with innovative products and services targeting Asian but also global customers to be grown into significantly larger players,” said Mohammed Alardhi, Investcorp’s Executive Chairman. “GBA’s role as one of the main economic engines of China has never been more important as the country looks to rebalance its economy towards a consumption and innovation driven model, and the GBA offers enormous investment potential.”
“Our differentiator is that our fund is buy-out focused and we believe there is huge scope for strong returns,” said Investcorp’s Co-CEO Hazem Ben-Gacem. “The GBA’s business ecosystem includes one of the globally leading capital markets, Hong Kong, China’s leading technology and innovation hub, Shenzhen, a plethora of world-class manufacturing and R&D city clusters all efficiently linked together by high-speed train and to the world through leading airports and container ports. This is underpinned by the continuous influx of a highly educated and skilled workforce and in combination has created big success stories such as Tencent, ByteDance, BYD and Mindray.”
Kevin Lam, Managing Partner of Investcorp Fung GBA Fund said, “we are very pleased to again join forces with Investcorp to invest in businesses meeting the unique needs and aspirations of Millennials and Gen Zers across China and the world. Hong Kong is strategically located for investors to access the fast growing consumer markets in the Greater Bay Area and as a bridge between China and the World. Investcorp brings a strong global alternatives investment platform and brings its unique Middle East heritage and understanding of these emerging markets.”
Comparative data supports the scope for greater growth in the region. Per Capita GDP in China’s GBA is currently around USD $22,501, which is still a fraction of other globally leading bay areas such as Tokyo (USD 45,084), New York (USD 78,586) or San Francisco (USD $128,573). With a population larger than Germany and an economy already surpassing that of Canada, China’s GBA region attracts tens of thousands of highly educated and skilled people each year and puts the region on a sustainable track to close the gap to the other world leading bay areas.