Jul 2, 2011
The Straits Times
CMIA fund targets China's high-growth sectors
PRIVATE equity firm CMIA Capital Partners has set up a growth fund that will invest in high-growth Chinese industries like agriculture.
The US$200 million (S$246 million) CMIA Fund IV, the firm's fourth, will invest in line with the economic strategy unveiled by Chinese officials in March.
Beijing's policies are expected to benefit firms in agriculture, consumer goods and services, health care and infrastructure.
The fund will target high-growth companies in these areas as well firms outside China that can benefit from the mainland's growth.
CMIA managing partner and co-founder Lee Chong Min said it is evaluating and negotiating with a Singapore precision engineering company that wants to acquire its competitor in China.
This private company could be one of the fund's first investment targets.
CMIA expects to invest about US$60million this year.
It intends to raise US$100 million in three months, with the other US$100 million to make up the fund expected to be committed after another year. The cash is expected to come from large global investors, including institutions and rich families.
CMIA has identified China's agriculture sector as one key focus, on rising global demand for produce amid a shrinking supply of arable land.
It noted that the sector accounts for about 11 per cent of China's economic output and over 40 per cent of employment, ensuring government protection and favourable investment terms.
CMIA considers itself an 'active' investor in companies - it appoints directors and finance officers and controllers to the firms, and helps them improve their business plans and corporate governance.
It also introduces companies in its portfolio to suppliers, customers and partners around the world.
CMIA was an investor in vegetable producer China Minzhong Food Corp, which listed in Singapore last year. It started work with the firm in 2003 and funded the 2004 management buyout of the company, which had been a China state-owned enterprise.
CMIA still owns a significant part of China Minzhong.
The firm also invested in steel coil-maker FerroChina, which collapsed in 2008 because banks refused to roll over its loans.
But Mr Lee said that CMIA had advised FerroChina in 2007 to stop its aggressive expansion plans and to pay down its debt to a safer level.
Farm produce on display at an exhibition for retailers in Nanjing in eastern China on Wednesday. CMIA has identified the country's agriculture sector as one key focus of its $246 million CMIA Fund IV.
