Exclusive: China Everbright on track to raise $400m for infra

A new investor is poised to back a vehicle launched in 2014 by the asset manager and a Chinese rail group.

A vehicle co-founded by Hong Kong-listed China Everbright and Chinese developer Shandong High-Speed is set to grow by up to two-thirds as it gains traction among external investors.

Daniel Hu, the fund’s chief investment officer and a managing director at China Everbright, told Infrastructure Investor a new institution would back the vehicle in the first quarter of this year.

The fresh commitment is expected to bring Shandong High-Speed Everbright Industrial Investment Fund, which has raised CNY1.8 billion (€255 million; $276 million) so far, to CNY2.5-3 billion. Hu didn’t disclose the name of the prospective investor.

China Everbright and Shandong High-Speed originally established the fund in April 2014, seeding it with CNY200 million and CNY1.6 billion respectively. The vehicle, which targets mid-market deals across China, has a CNY5 billion hard-cap.

It favours significant minority stakes in companies over taking outright control of assets, Hu said. “It is easier to draw higher returns by supporting the development of China’s privately owned enterprises, usually with enterprise values at around CNY200-400 million.”

The fund has completed investments in three new projects, focused on sectors including sewage treatment and natural gas, and managed five post-investment projects since inception, according to China Everbright's 2015 interim report.

The move is part of the firm’s efforts to diversify its investment portfolio, Hu explained, adding that the asset manager has been eyeing opportunities in “fast-growing eco-industries” such as renewables, waste treatment, gas pipelines and clean technologies.

He argued that such sectors, backed by China’s government, are relatively immune to the country’s economic slowdown.

China Everbright is controlled by state-owned financial conglomerate China Everbright Group. It managed HKD51.7 billion (€6.17 billion; $6.67 billion) of assets, under 30 funds, as of 30 June 2015.