China-CEE Investment Co-operation Fund II (“Fund II”) recently announced its first closing with secured commitments of USD 800 million. A final total capital commitment of USD 1 billion is targeted for 2018. CEE Equity Partners is pleased to have been appointed the Investment Advisor to Fund II.
As for China-CEE Investment Co-operation Fund I (“Fund I”), the geographical coverage of Fund II will be the 16 countries of Central and Eastern Europe (“CEE”) from the Baltic States to Albania. CEE Equity Partners has continued to strengthen its regional coverage with four new investment professionals and a new office in Prague. This brings our team to 28 investment professionals across five offices in the region – Bucharest, Budapest, Prague, Warsaw and Zagreb.
Fund I was established in 2014 by China Exim Bank in partnership with other institutional investors from the CEE region to capitalise on investment opportunities in CEE countries. CEE Equity Partners has since 2014 overseen 16 transactions by Fund I in five countries totaling over USD 500 million. Fund I focuses chiefly on four sectors: specialised manufacturing, infrastructure, energy and telecommunications. Further details are at www.cee-equity.com
Fund II has the same investor base as Fund I, plus the Silk Road Fund. Fund II has a broader sector mandate – in addition to the four sectors above, it can also invest in other areas, such as healthcare, tourism, education and agriculture. The value of a typical equity investment will range from USD 20 to USD 100 million with additional debt financing if appropriate, on an investment horizon of 5-8 years. The Silk Road Fund can co-invest with Fund II, so equity tickets greater than USD 100 million can be considered.
Fund II’s preference is for well-managed, cash-flow generative and asset backed companies poised for growth. Majority stakes are preferred, although significant minority stakes are possible.
Fund II is unlikely to invest in operational turnarounds and privatisations.