China Investment Corp. (CIC), the country’s deep-pocketed sovereign wealth fund, is joining France’s BNP Paribas Group and private equity manager Eurazeo to launch a 400 million euro (US$453 million) fund to finance investments by European companies in China.
The move comes more than a year after Chinese President Xi Jinping announced the formation of the fund – the France-China Cooperation Fund – during a state visit to France in March 2019.
“The fund aims to draw on the three partners’ expertise by leveraging BNP Paribas’s networks in France, Eurazeo’s investment capability, and CIC’s support of the fund’s investee companies,” the French bank says in a statement on June 4.
The initial 400 million euro capital comes from the three investors. Their individual shares are not disclosed.
But BNP Paribas says the partners may inject up to 250 million euros more into the fund, with a maximum 25% each coming from CIC and the French bank.
Paris-based Eurazeo will manage the fund, which is “actively seeking new investment opportunities” in China alongside the private equity manager’s two small-cap funds, Eurazeo Capital and Eurazeo PME, the lender says.
It adds that the fund will target companies in sectors that have “significant opportunity” and where Eurazeo has established track records, including advanced industrials, business services, consumer goods and services, healthcare, and digital technology.
CIC plays a key role in not just managing China’s wealth in a way that maximises returns but also encouraging development of the domestic economy, according to Ee Fai Kam, senior vice president and head of research and data operations at data provider Preqin.
He points to the wealth fund’s participation in other similar initiatives such as the China-US Industrial Cooperation Partnership and China-Ireland Technology Growth Fund.
“I certainly see CIC continuing to be active in new bilateral funds like these going forward,” Mr. Kam tells Asia Asset Management (AAM).
CIC considers bilateral or multilateral funds as new ways to invest in overseas assets and increase its allocation to long-term investments, according to Ye Kangting, a research analyst at investment consultancy Cerulli Associates.
“It is supportive in such a model to grow relevant fund sizes,” Ms. Ye tells AAM.
CIC has around $1 trillion of total assets currently.