(Reuters) – U.S. private equity fund Blue Point Capital Partners, which helps mid-sized firms in the United States invest in China, is eyeing new opportunities to help Chinese companies invest abroad, its Asia managing director said.
With U.S. companies cash-strapped by frozen credit markets, private equity firms such as Blue Point are changing strategy.
Blue Point aims to spend a quarter of its newly-raised, $400 million fund in China, helping local manufactures acquire U.S. companies, Chip Chaikin said in an interview in Shanghai.
“A couple of years ago, private companies in China weren’t ready to do it. Now, they recognize they need to grow somewhere else too, and they are more sophisticated and bigger,” he said.
“Entrepreneurs in China have a once-in-a-life-time chance to buy overseas technology, brand, market channels at a bargain.”
Blue Point, 3i Group Plc and other private equity firms are suffering from the impact of a deepening global credit and economic crisis that has hurt the value of their investments and made exiting more difficult.
Blue Point has previously funded China expansion by five U.S. companies, including auto parts maker QSR and architectural & design firm Callison Architecture, but now, many U.S. companies are too cash-strapped to expand overseas.
“If they have cash, they want to do it. China is the only place they can grow,” Chaikin said. “But most of them don’t have cash.”
Meanwhile, Chinese companies are more eager to buy assets abroad, as an appreciating yuan makes overseas acquisitions cheaper, and the government calls for a change in China’s growth model, which relies too much on low-cost manufacturing.
“Many Chinese manufactures are at the bottom of the global industry value chain, struggling with thin margins,” said Chen Xiaoming, director of Blue Point Asia.
“We could help them climb up the value chain, by acquiring overseas brands and sales channels.”
Blue Point seeks to invest $15 million to $50 million of equity capital in mid-sized companies which generate revenue of between $25 million and $250 million, according to its website.
The 18-year-old firm set up an office in Shanghai in 2004, to help its U.S. portfolio companies tap growth opportunities in China, the world’s fastest-growing major economy.
By Samuel Shen and Pilly Zou
(Editing by Jacqueline Wong)