China Resources Capital Seeks to Raise $4.6 Billion Over a YearBy
Funds to invest in environment, pharmaceutical, energy sectors
In talks to sell stake in planned $2 billion health fund
The alternative investment unit of China Resources Group is seeking to tap growing demand from local institutions to raise $4.6 billion for new funds in areas ranging from the environmental sector to pharmaceuticals and energy.
China Resources Capital Management Ltd. aims to raise 15.5 billion yuan ($2.3 billion) for three funds by the end of 2017, Chief Investment Officer Tony Zhang said in an interview last week. By June next year, the unit of the state-owned Chinese conglomerate plans to create a $2 billion health-care fund and a $300 million life-science fund denominated in U.S. dollars, he said.
“The investment appetite from Chinese institutions is massive and there’s so much money sloshing around looking for yield,” Zhang said. “We’re hoping to pool as much capital as we can in the next couple of years and generate a track record from investments.”
An unprecedented amount of money is flowing to Chinese private equity as financial institutions, government entities and private companies seek alternative investments for better returns. Yuan-denominated fund-raising for the nation’s buyout and venture-capital industry surged 177 percent to a record $55 billion last year, according to Pricewaterhouse Coopers.
Hong Kong-based CR Capital, as the unit is known, will get about 25 percent of the capital from China Resources Group, and the remainder will come from third-party investors, mostly Chinese banks, insurers and asset managers, Zhang said. The company is also in discussions to receive 20 percent of the money for the dollar-based health-care fund from a foreign institution, he said, without naming the firm.
Here is a breakdown of what CR Capital is seeking to raise by the end of 2017:
- 10 billion yuan for an environmental fund
- 3 billion yuan for a pharmaceutical fund
- 2.5 billion yuan for energy investing
CR Capital has already raised HK$58 billion ($7.4 billion) for earlier investments and deployed about a third of that, mostly in real estate, Zhang said. The company recently closed a 30 billion yuan fund for Chinese residential property.
China Resources operates a diverse range of businesses, including publicly traded companies in industries ranging from energy to pharmaceuticals and property development.
CR Capital will make use of the group’s existing network, while avoiding conflicts with it when making investments, said Zhang, who joined the firm in August after overseeing mergers and acquisitions at China Resources’ holding company. The asset manager is aiming to capitalize on the edge it has over foreign funds that face restrictions on certain China investments, he said.
“Our investors believe we have a strong backer that can provide us with the network, resources and decent investment opportunities,” he said.