China Renaissance, a Chinese asset management and investment banking company, is considering potential investments in fast-growing Middle Eastern companies, its chief executive said. The company is exploring opportunities to create a regional presence against the backdrop of a thriving start-up culture and accelerating economic growth.
Huaxing Growth Capital, the company’s leading investment tool with $ 5.8 billion in managed assets, will soon begin assessing investment targets in the wider Middle East and North Africa region, Fan Bao said. The national in an interview.
“We will start looking for opportunities, but it is early again. This time during the trip I talked to some of the local companies and startups. Some of these opportunities are quite exciting, “said Mr. Bao. He is currently traveling in the Gulf region to meet with investors, government officials, companies and start-ups to assess investment opportunities.
CR is ready to invest as long as they “meet the investment criteria” and if they have a “Chinese angle, even better”, he said of the potential investment goals.
Regional markets and some of the promising companies are at a similar stage as Chinese companies and the market a few years ago in terms of their growth potential.
“Sometimes I feel like I’m sitting in a time machine,” Mr Bao said. “I believe we have a lot to offer.”
CR is the latest among international investors who want to take advantage of the bustling entrepreneurial scene in the region. Sovereigns, especially in the GCC’s six-member economic bloc, have taken steps to develop the ecosystem to launch amid a strong recovery from the slowdown caused by the pandemic.
The UAE, the second largest economy in the Arab world, has developed several of its own start-up policy initiatives to fuel its oil economy.
Last year, the country unveiled the Entrepreneurial Nation initiative, which aims to make the Emirates home to 20 unicorns, a term for start-ups worth more than $ 1 billion by 2031, and to attract and expand small and medium-sized enterprises.
Investment in private capital and venture capital in the Mena region has risen sharply over the past few years. Total funding from venture capital funds in the Middle East alone rose 132 percent to nearly $ 2 billion last year, with the total number of transactions rising 5 percent to 410, according to the data platform Magnitt.
Founded in 2005 to advise Chinese technology and start-up companies, CR has grown into one of China’s top 10 private equity investment groups. Its overall investment management AUMs reached $ 7.7 billion at the end of last year.
CR advised and invested in more than 1,125 transactions totaling more than $ 1.4 trillion ($ 220 billion) as of June last year.
The Hong Kong-based company, which also offers wealth management and services, including initial public offerings, private placements and consultations on mergers and acquisitions, launched HGC in 2013, which manages four US dollars and four yuan-denominated funds.
It invests in both growth and maturity companies, with a focus on smart industries, technology, healthcare, smart consumption and smart businesses.
HGC’s investments include China-based technology company Svolt, high-end electric car maker Li Auto, semiconductor company Navitas and China’s e-commerce platform Meituan.
CR also sees the potential to increase the flow of Middle East direct investment to the Chinese market and vice versa amid strengthening financial and economic ties between the two regions.
Investors in this region are currently largely “under-distributed” to China and typically gain access to the Chinese market through European and US-based international fund managers.
“They [the funds] are the goalkeepers, so it is not a direct model. “A lot of money goes to London, to New York, and then to China,” he said.
“This, in my opinion, is very inefficient – there is really no reason for this investment to be diverted.”
CR could be the door to support direct investment from the Middle East to China.
Most Chinese investment in the region has been largely made by state-owned entities, and private sector investment in the Middle East has been “small and far in the middle, very schematic,” Mr Bao said.
“The creamy part of China’s economy – technology and the digital economy – they’re hardly there, most of our boys [CR portfolio companies] they are not there, “said Mr Bao.
“This is an area where we want to add value” and build “trusted connectivity” between Chinese and Middle Eastern private sector investors.
CR is “very serious” about expanding into the Middle East, but has not yet decided where it will locate.
The company is considering several options, including setting up a regional base to bring the full suite of its investment banking and wealth and asset management services to the region. He may also choose to form several partnerships with local companies for different segments of his business, Mr Bao said.
“Why can’t there be so many partnerships in different areas, even in different geographical areas?” He said. “We have a big plan and we want to do more, but we also know that it takes time.
Updated: June 20, 2022, 5:06 p.m.