PSource Capital Plans China Infrastructure Fund

LONDON(Reuters) – Fund firm PSource Capital plans to set up a fund investing in Chinese infrastructure and seeded with hundreds of millions of dollars from a Chinese investor as funds increasingly look East for new investment opportunities. PSource chief executive Soondra Appavoo told Reuters that the institutional investor, which he declined to name, was doing due diligence on PSource and that the fund could be launched within months.

The fund would initially be just for the institution but could later be opened up to other investors.

An increasing number of hedge funds and other investment firms are opening offices in Asia or launching new funds focused on the region on the back of a strong rebound from markets last year and what they view as attractive investment opportunities. “In China there’s been no recession,” Appavoo told Reuters in an interview this week, adding that talks on the fund had been underway for three years.

“It’s the world’s biggest infrastructure market and will be for the next 10 or 20 years. In an economy that needs to grow super-fast returns will be high. And it’s a stable economy.”

Appavoo said the fund would team up with Chinese construction company Pacific Construction, for whom it would provide capital on less than 10 projects such as roads, bridges or tunnels.

The institution will invest “a couple of hundred million dollars” into the unlisted fund, he said.

Other funds have spied opportunities in Chinese infrastructure. JP Morgan Asset Management for instance has invested almost a quarter of its $860 million Asia infrastructure fund in China and India assets.

By Laurence Fletcher
(Editing by David Cowell)