China Everbright plans to launch a $1 billion fund focused on operational infrastructure assets in Europe, according to Daniel Hu, a managing director at the Hong Kong-listed firm.
The company intends to raise the money from Chinese institutional investors including local pension funds and insurance companies. Soft commitments have already been secured from two funds of funds, Hu said without disclosing the investors' names.
Stressing ‘stability’ as the fund's top priority, he added that the vehicle will seek to invest in brownfield infrastructure projects. Airports, seen as offering potential synergies with China Everbright’s aircraft leasing business, will be a prime focus.
China Everbright plans to turn some of its airport acquisitions into logistic hubs connecting China to Europe, Chen Shuang, China Everbright’s chief executive officer, told reporters in Chongqing last November.
The fund will have an investment period of between three and five years. The team has already been looking at potential deals, Hu said. It hopes to start buying assets in the first quarter of 2016.
Hu explained that downward pressure on the Chinese currency and the country’s economic slowdown were prompting domestic investors to seek diversification by deploying capital overseas, a move accelerated by the recent hike in US interest rates.
He added that the company hopes to repackage some of the fund’s investments into new financial products so as to provide Chinese retail investors with access to the European market.
Last week, China Everbright launched a renminbi-dominated fund of funds with a target of CNY10 billion (€1.41 billion; $1.52 billion). The vehicle will invest in the company’s primary funds, which also cover real estate and urban development sectors, as well as other private equity funds in the market, according to a statement.
Chen also told reporters last November that a large portion of the vehicle will be earmarked for acquiring infrastructure assets overseas.