HONG KONG (Reuters) – British private equity firm 3i Group Plc (III.L) said on Tuesday that it expects to invest up to a combined $300 million in about three deals in China next year as it moves to regain momentum after making no investments in 2009.
“We hope to invest in two to three deals per year and will obviously look to maintain that pace,” Anna Cheung, 3i partner and co-head for China told Reuters in an interview.
Cheung said 3i’s typical investment in China deals ranged from $30-100 million, with a sweet spot between $50 million and $70 million.
“Historically we have been a little bit lower. We have been moving up, but I think we’re just moving with the market.”
3i’s investment in PCD Stores (0331.HK), which listed on the Hong Kong stock exchange on Tuesday, has earned the company a return of 2.2 times its initial investment of $31 million in 2005. It sold its stake, representing almost 10 percent of the company prior to the IPO, for $65 million.
PCD Store’s IPO raised HK$2.9 billion ($374 million), valuing the company at $1 billion. Shares of the high-end department store operator topped the most actively traded stocks on Tuesday, jumping more than 33 percent from their issue price to HK$2.55.
3i, one of the world’s few publicly traded private equity firms, has invested $250 million with 13 deals in China since it began operating there nine years ago. Previous investments include digital advertising company Focus Media (FMCN.O) and Chinese hot-pot restaurant chain Little Sheep (0968.HK).
In March, 3i recorded a return of three times its investment from the sale of its 11.32 percent stake in Little Sheep, according to a source with direct knowledge of the deal.
3i’s China portfolio consists of four companies — John Hardy, Joyon Real Estate, Futaste and D.Phone.
D.Phone, a retailer of mobile phones in China was the “most ready” and “probably getting close” to the stage where it would be ready to list, Cheung said. However she declined to say whether it would list next year.
Cheung said sectors of focus for 3i include consumer, alternative energy and oil and gas, industrials and business services.
In December 2008, 3i relocated its China partners to its Beijing office from Hong Kong and Shanghai as part of a global plan to improve cost efficiency and to increase focus on China deals. 3i’s Asia team of 28 investors have invested $1 billion in their portfolio.
The FTSE 100 company’s shares have risen 65 percent since the start of the year, recovering from sharp falls in 2008 when private equity firms took a large hit from the credit crisis. 3i said this year it had only seen clear signs of recovery in India and China.
By Farah Master and Donny Kwok
(Editing by Chris Lewis)