Mutares to enter China with Shanghai office in Q4

Germany-based private equity holding company Mutares will extend its reach into the Chinese market this year to further explore opportunities, which will boost the company's development, said the company's founder and CEO Robin Laik.

Laik made the comments during a three-day trip in China starting on Tuesday, his first visit to the country in four years.

The company's first footprints in the country will be marked by its Shanghai office, which is scheduled to open in the fourth quarter, said Zhu Ran, head of Mutares China.

The China team's headcount will increase to about 40 in the next two to three years, Laik said.

Considering China of "super importance" to Mutares and the engine of the world economy, its presence in China is crucial for the company's development, said Laik.

Listed on the Frankfurt Stock Exchange, Mutares Holding's net income surged 44 percent year-on-year to 72.9 million euros ($79.6 million) in fiscal year 2022. The company's high transaction activity, including closing 12 acquisitions in 2022, is the major growth driver. Its net income will come between 92 million and 112 million euros for 2023, said the company's management board.

Although China's economic recovery is weaker than market expectations in the previous months, Laik expressed much confidence that the government will unveil more policies to stimulate consumption.

The National Development and Reform Commission, the country's economic regulator, said in an announcement on Monday that more measures will be taken to facilitate the recovery and expansion of consumption.

The purchase process of cars should be optimized while encouraging more consumption of new energy vehicles, said the NDRC.

Mutares focuses on the acquisition of parts of large corporations, or carve-outs, and medium-sized enterprises in transitional situations. It has been focusing on European companies with respective annual revenues of 100 million to 750 million euros. Companies from the industries of automotive, technology and engineering, goods and services, as well as retail and food, are its major targets.

As for the exit channel, the company's CIO Johannes Laumann explained that an IPO in the A-share market or Hong Kong will be one major choice. It will also help its potential Chinese clients to divest part of their assets in the European market, he said.

The automotive industry will be the first investment target for Mutares in China, said Laik.

Mathieu Purrey, head of Mutares' automotive division, said it could help Chinese automotive original equipment manufacturers expand into the European market through their China operations.

According to Purrey, Chinese automotive original equipment manufacturers are already selling more in the European market than in the domestic market. However, the next three to five years is a very important window for Chinese EV makers to further increase their market share in Europe.

The rapid development in the Chinese automotive industry is another reason for Mutares to seek closer cooperation with Chinese companies, Laumann said.

"Ten years ago, when you sought innovation in the automotive segment, you looked a bit to the United States and predominantly to Europe. Then Tesla came. But now, when you look in the EV market for innovation globally, you look to China," said Laumann.

In addition to government support, China's emphasis on investment in manufacturing, and key industries, the improvement of the overall education level and the business environment, and the substantial increase in the proportion of research and development are all important factors for the rapid development of China's EV industry, explained Laumann.

MoldTecs, a supplier of plastic parts wholly owned by Mutares, was registered in Taicang of East China's Jiangsu province in February. Mold-Tecs will invest 25 million euros to set up a factory in Taicang, the fourth of its kind globally. The factory's annual output value is expected to exceed 500 million yuan ($70 million) upon operation.