Adveq planing higher China investment

Adveq Management AG, the global private equity fund of funds company, plans to increase its investments in China from next year, its chairman has told China Daily, a decision based on its expectation of strong economic growth in the country.

A PE fund of funds is an investment strategy of holding a portfolio of other private equity funds rather than investing directly in deals.

"Next year, Adveq will allocate a third of our annual investable funds to Asia, particularly China, the same as that to the US and Europe," said Bruno Raschle, chairman and chief executive officer of Zurich-based Adveq.

"And within five years, that investment amount in China will have increased substantially."

Adveq commits about $1 billion every year in the global market, meaning around $300 million is likely to go to Asia, and particularly China. The company first entered China in 1998 and has invested more than $500 million in funds here.

"The dynamics in all industry sectors in Asia - but also maybe in future, the whole world - is influenced by China because of its rapid growth, transformation and its large number of consumers," said Raschle.

He said the Chinese government is making every effort to keep the country's rapid transformation process under control, economically and politically, adding that its new generation of infrastructure companies - particularly Internet-based firms such as Alibaba - are providing a significant platform on which people can build new businesses.

"That's an additional transformation on which China is doing a good job," he said.

Founded in 1997, Adveq had some $5.7 billion worth of assets under management by June 30, managed by offices in Zurich, Frankfurt, London, New York, Beijing, Shanghai and Hong Kong.

It has teamed up with more than 35 private equity firms in China, and besides funding investments it is also involved in co-investments and advising large financial institutions on outbound investments.

According to a report by Zero2IPO, a leading integrated service provider and investment institution in China's private equity industry, PE fund of funds first entered Asia in 1990s and began to be active in 2005, benefiting from the rapid development of the Chinese private equity and venture capital market, particularly.

Besides Adveq, leading fund of funds providers operating in China include Adams Street, Horsley Bridge, Pantheon, and LGT Capital Partners.

The report said that after the financial crisis, wealth transferred to emerging markets and Asia played an increasingly important role in global investment portfolios, leading to a rise in the number of PE fund of funds choosing to base their operations in Asia, in search of business particularly in China and India.