SHANGHAI (Reuters) – Macquarie Group Ltd (MQG.AX) has formed a joint venture with China Everbright Ltd (0165.HK) to launch two funds targeting infrastructure which aim to raise a combined $1.5 billion, joining a growing list of foreign players expanding private equity investments in China.
The funds – one open to foreign institutional investors and the other to domestic investors – will invest mainly in toll roads, railways, airports, renewable energy and water projects in China, Hong Kong and Taiwan, the two companies said on Wednesday.
Macquarie is Australia’s biggest investment bank and manages $36 billion in infrastructure equity globally. Everbright is a unit of China’s second-biggest financial conglomerate Everbright Group. The firms have committed up to $100 million as sponsors of the two new funds, each targeting a first close in 2010.
“We are confident that Chinese infrastructure continues to offer attractive investment opportunities to both international and domestic investors and that our first mover advantage will contribute to our success,” David Russell, Macquarie’s head of private equity Asia said in a statement.
“Particularly in Asia and our emerging market businesses, we are constantly reminded that key to the success of building sustainable, long-term businesses is a commitment to being local.”
U.S. private equity firm Blackstone Group LP (BX.N), French brokerage CLSA and Hong Kong-based First Eastern Investment Group have recently announced plans to launch new funds in China, as the Chinese government seeks foreign investment to revive the private sector and complement the country’s 4 trillion yuan ($586 billion) stimulus plan that focuses on infrastructure.
“Greater China is one of the largest and most diverse markets in the world and the market continues to offer enormous and rapidly expanding infrastructure investment opportunities,” said Chen Shuang, chief executive officer of Everbright.
About $67 billion of foreign direct investments have been channelled into China’s infrastructure sectors by end-2007, while investment continues to grow rapidly, fuelled by the country’s annual economic growth of 6 to 10 percent, Chen said.
Macquarie is a decade-old player in China’s real estate market, and is setting up a joint venture trust company in the country.
Last Friday, Blackstone, the world’s biggest private equity firm, announced plans to create a 5 billion yuan ($731.7 million) fund in partnership with the Shanghai government.
CLSA plans to launch a 10 billion yuan local-currency fund via a newly set up asset-management venture, while First Eastern aims to raise 6 billion yuan selling funds in China, the companies said in separate statements this week. ($1=6.833 Yuan)