China Everbright eyes third close for its overseas infra fund

The Hong Kong-listed fund manager is working on reaching a $700m third close and completing its third investment within the next two months.

Having already raised $400 million for its Everbright Overseas Infrastructure Investment Fund, the Hong Kong-based fund manager is expecting to hold a third close on $700 million within the next two months, around the same time it’s looking to complete a deal in a public transport project in the Nordics.

The firm expects to finalise the investment – the third to be made through the vehicle – by May at the latest, China Everbright’s chief financial officer Richard Tang said during a press conference, without disclosing further details.

The infrastructure fund has so far invested approximately $150 million in two assets – Albania’s Tirana International Airport and an optical fibre network company in Hong Kong, which the company has not named. According to Kevin So, the firm’s chief strategy officer, the fund expects to invest in up to 15 projects.

The vehicle, which has an eight-year life, targets a broad range of infrastructure sectors, including airports, telecommunications, renewables, water and waste treatment, as well as public transportation and logistics. It looks for controlling stakes in the assets it acquires with a ticket size typically ranging from $50 million to $200 million.

Officially launched in July 2017, the Everbright Overseas Infrastructure Investment Fund, the firm’s first vehicle to invest in infrastructure overseas, has a target of $1 billion. Around 80 percent of its capital is allocated to OECD markets, with the remaining capital to be spent in emerging economies.

Last October, it received a $100 million commitment from a China Life Insurance subsidiary, enabling the firm to reach a second close on $400 million. While China Everbright has declined to name other LPs investing in the fund, one of its executives previously told Infrastructure Investor that the firm has committed 30 percent of the total fund size as seed capital.

Relatively high asset valuations in the global market has made finding good investments at a reasonable price challenging, China Everbright noted in its 2018 outlook.

According to Tang, one of the key challenges is the fierce competition resulting from institutional investors – including pension funds and insurance companies – looking to invest directly.

Tang added that the fund benefits from its mid-market position, in which he sees less direct competition from global institutional investors and more opportunities with unique business models.

“In response to the challenges, we rely on our good investment team to proactively discover investment opportunities,” said Tang. The fund is currently headed by two managing directors, Richard Hu and Daniel Hu, and has an investment team of six.

China Everbright is currently managing 48 funds across various asset classes, including private equity, real estate, venture capital, debt, secondaries, equities, fixed-income products and funds of funds in China and overseas. As at end 2017, its total assets under management stood at HKD$129 billion ($16.4 billion; €13.4 billion), a 48 percent increase from 2016.