China and Ire­land launch bi­lat­eral fund

Each side putting in $50 mil­lion to lure more cash to the tech sec­tor

China Daily (Canada) - - BUSINESS - By HE WEI in Shang­hai hewei@chi­nadaily.com.cn

China and Ire­land have jointly in­vested in a $100 mil­lion fund to fa­cil­i­tate bi­lat­eral in­vest­ment in the tech­nol­ogy sec­tor, as cap­i­tal from Bei­jing continues to play a con­struc­tive role in Dublin’s eco­nomic re­bound.

The fund, which was launched with $50 mil­lion in­jec­tions each from the China In­vest­ment Corp and Ire­land’s Na­tional Pen­sion Re­serve Fund, ex­pects to at­tract up to $250 mil­lion, said Brendan Howlin, Ir­ish min­is­ter of the depart­ment of pub­lic ex­pen­di­ture and re­form.

Un­der the pact, the two coun­tries’ sov­er­eign-wealth funds will fi­nance the pur­chase of stakes in Ir­ish tech­nol­ogy com­pa­nies. It is ex­pected to be the first in a string of joint ini­tia­tives to take place be­tween the two coun­tries.

“The fund pri­mar­ily tar­gets com­pa­nies op­er­at­ing in core tech­nol­ogy sec­tors such as the In­ter­net, soft­ware and clean tech­nol­ogy, but it may also ex­pand to agri­cul­ture, food and med­i­cal ser­vices with the ad­vent of time,” he told China Daily in Shang­hai.

Co-man­aged by Chi­nese firm WestSum­mit Cap­i­tal and Dublin out­fit At­lantic Bridge Cap­i­tal, the fund was es­tab­lished un­der the aus­pices of the Ire­land Strate­gic In­vest­ment Fund, a na­tional ini­tia­tive to stim­u­late ex­ports and boost for­eign di­rect in­vest­ment as the coun­try emerges from its debt cri­sis.

The fund won’t it­self bor­row to in­vest, but it would be lever­aged in the sense that its cash will be used to at­tract more eq­uity, said the min­is­ter. A 100 mil­lion euro ($139.5 mil­lion) fund could typ­i­cally bring in ex­tra in­vest­ment ex­ceed­ing $200 mil­lion.

Ire­land was hit hard by a fi­nan­cial cri­sis that wrecked its banks

The fund pri­mar­ily tar­gets com­pa­nies op­er­at­ing in core tech­nol­ogy sec­tors such as the In­ter­net, soft­ware and clean tech­nol­ogy, but it may also ex­pand to agri­cul­ture, food and med­i­cal ser­vices with the ad­vent of time.” BRENDAN HOWLIN IR­ISH MIN­IS­TER OF DEPART­MENT OF PUB­LIC EX­PEN­DI­TURE AND RE­FORM

and the property mar­ket. The coun­try has for­mally ex­ited a 2010 bailout with the Euro­pean Union and the In­ter­na­tional Mon­e­tary Fund, and started to fund it­self through the in­ter­na­tional bond mar­kets.

Ac­cord­ing to Ir­ish Min­is­ter of Fi­nance Michael Noo­nan, the joint ven­ture was part of a strat­egy to deepen eco­nomic links be­tween the two coun­tries, which he hoped would ul­ti­mately lead to Ire­land tap­ping China to buy Ir­ish sov­er­eign bonds.

Since the out­set of the fi­nan­cial cri­sis, Ire­land has been seek­ing to di­ver­sify its sources of for­eign in­vest­ment away from Wash­ing­ton, which has long con­trib­uted the bulk of Dublin’s for­eign di­rect in­vest­ment. This par­tic­u­lar fund is de­signed to serve as a new­model to garner in­vest­ment from emerg­ing part­ners such as China, Howlin said.

“China, as a less tra­di­tional part­ner of Ire­land, is be­com­ing the world’s eco­nomic gi­ant. We want to de­velop ever-closer eco­nomic ties with China,” the min­is­ter said.

Ire­land wit­nessed a net in­crease of 7,071 posts by for­eign in­vestors in 2013, the high­est level of job cre­ation in more than a decade, ac­cord­ing to data from IDA Ire­land, the Ir­ish govern­ment agency re­spon­si­ble for at­tract­ing for­eign di­rect in­vest­ment.

While the Chi­nese pres­ence

is still at a rel­a­tively mod­er­ate level, Howlin said a num­ber of high­pro­file com­pa­nies, in­clud­ing Huawei Tech­nolo­gies Co Ltd, Ten­cent Hold­ings Ltd and In­dus­trial and Commercial Bank of China Ltd, have ei­ther gained a foothold or em­barked on busi­ness ex­pan­sion.

The lat­est ex­am­ple is China’s fifth-largest lender, Bank of Com­mu­ni­ca­tions Co Ltd, whose fi­nan­cial leas­ing arm es­tab­lished its Euro­pean head­quar­ters in Dublin in Fe­bru­ary, from where it will man­age 21 air­craft.

Like­wise, Ir­ish firms are also look­ing for in­vest­ment op­por­tu­ni­ties in China as the mar­ket ma­tures and reg­u­la­tory trans­parency in­creases.

Since 2008, China has out­paced Aus­tralia to be­come the top mar­ket in the Asia-Pa­cific re­gion for small and medium-sized Ir­ish en­ter­prises, said Alan Dixon, a Shang­hai-based di­rec­tor of En­ter­prise Ire­land, a govern­ment agency over­see­ing the de­vel­op­ment and growth of Ir­ish en­ter­prises across the world.

“There are more than 90 Ir­ish com­pa­nies with ei­ther in­vest­ment or part­ner­ships in China span­ning from man­u­fac­tur­ing, food to high-tech in­dus­tries. We ex­pect these ar­eas to grow ex­po­nen­tially in the years to come,” said Dixon.

He said the Chi­nese govern­ment has made big strides in re­la­tion to in­tel­lec­tual property pro­tec­tion, a long-term con­cern held by multi­na­tional cor­po­ra­tions in­clud­ing those from Ire­land. These have helped them de­ter­mine their busi­ness strate­gies in China.

To­tal Chi­nese in­vest­ment in Ire­land amounted to $150 mil­lion by the end of 2012, com­pared with $148 mil­lion by the end of 2011, ac­cord­ing to the Eco­nomic and Commercial Coun­selor’s Of­fice of the Chi­nese Em­bassy in Ire­land. Bi­lat­eral trade stood at 8 bil­lion eu­ros.

The Ir­ish govern­ment pro­posed a 10-year strat­egy in early 2014 to boost trade be­tween Ire­land and China and other Asian coun­tries which could tre­ble trade lev­els to 20 bil­lion eu­ros a year and cre­ate thou­sands of new jobs.

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