China Everbright Overseas Infrastructure Fund (COIF) is in “very advanced” talks with two potential LPs in Asia, Managing Director Daniel Hu told Inframation, adding that the investment vehicle is considering lowering its fundraising target.
One of the investors is from the Greater China region, he said, declining to reveal where the other is based. COIF is also speaking with other potential investors in Asia and Europe, according to Hu.
The equity fund was launched three years ago by China Everbright Ltd., the PE unit of Chinese conglomerate Everbright Group, and has an eight-year lifespan. Its initial target of raising up to USD 1bn may be lowered, Hu said, attributing this to COIF being a first-time fund and because investors in Asia, particularly China, prefer debt structures.
“Given where we are now, we would be happy to have final close at USD 650m,” Hu said in an interview.
Everbright intends also to launch a fund focused on China’s Greater Bay Area, which will link Hong Kong, Macau, Shenzhen and other Pearl River Delta cities into an integrated economic and business hub. This fund will have infrastructure investment as one of its focuses. Earlier this month, the Chinese government released an official blueprint for the project, which will include the development of a world class cluster of ports and airports as well as transport, energy and telecom infrastructure.
The fund’s target industries include roads, transport terminals, railway stations, water distribution networks, power generation facilities and oil and gas storage. It reached first close in July 2017 with a USD 300m commitment by its parent company, while a second came three months later with a USD 100m commitment from China Life Insurance. The fund took over 100% of Boreal, Norway’s fourth-largest public transport operator, in April last year and is now interested in South East Asian assets at the expansion stage in the renewable or telecom sectors, Hu said. However, the fund’s strategy of having 70% of its investments in Europe remains unchanged.
COIF’s first acquisition was Albania’s Tirana Airport in 2016, an investment that generated an IRR that exceeded expectations. A second deal was struck in early 2017 through six-year convertible bonds issued by Hong Kong-based Top Express, which is building a fibre-optic network in the city’s New Territories region. Later in the year came a USD 20m investment in a logistics subsidiary of Chinese online retailer JD.com.