French PE firm plugs into China’s priorities

Idinvest Partners, a French private equity fund, is seeking finance for certain companies in its portfolio that could have bright prospects in China.

The fund’s move highlights a rising trend in the European PE space — that of tapping into the Chinese hunger for advanced technological know-how.

Ever since it shifted its economic focus to quality of growth, China has been big on the high-tech sector and environment-themed innovations.

According to Sylvain Makaya, a senior partner of Idinvest, there has been a strong demand in China for innovative technology to stoke growth and address issues such as pollution.

The PE fund sees opportunities in China’s new priorities for the companies it backs financially. Since many of them are high-growth technology firms, Idinvest will help them gain access to the Chinese market and capital.

The firm has already helped its European portfolio companies foster several partnerships with local Chinese companies in fields such as wind farm technology and the internet of things, according to Solomon Moos, head of Idinvest China, the firm’s local arm.

The French fund now manages assets worth nearly 9 billion euros ($10.7 billion) globally and claims to be the largest European PE fund that focuses on investing in small and medium-sized companies.

“Several years ago, the advice we gave to our portfolio companies was to go to the US, which was the biggest market in the world. Now the advice is go to Asia and China,” Makaya said.

Since its formation in 1997, Idinvest has financed more than 3,500 European businesses through direct equity investment or private debt.

The latest step of the fund’s international expansion was the establishment of its China office in Shanghai earlier this year.

“The growth in China has been incredible over the past few decades. Now what everyone wants is to live a great life and the country needs to have quality growth. And

Number Number of of European European businesses businesses that that Idinvest Idinvest has has financed financed through direct through equity direct investment equity investment or private debt or private debt Assets Assets managed managed by by Idinvest Idinvest Partners Partners

China has been very clear on this and it is the main policy target for the government,” Moos said.

“Europe has very unique and advanced technology know-how but the market is much smaller. China has the need to upgrade its traditional industries with technology and has a huge market. So both sides will be winners by forming partnerships.”

Makaya said the fund is hoping to form partnerships with local Chinese companies in sectors such as healthcare, retirement and elderly care, and digitalization.

“A lot of China’s priorities revolve around environment-related themes such as smart cities, green energy, internet of things, healthcare and consumer goods such as digital products, food and fintech. At Idinvest, we can see how much interest Chinese investors show when we talk about our portfolio companies from these sectors,” Makaya said.

The French fund is also eyeing opportunities emerging from China’s Belt and Road Initiative.

“It could be a game-changer for numerous companies, enticing new projects to be launched or bigger developments to be made on a cross-border basis,” Makaya said.

Since the Chinese market could be hard to unlock for some European companies, Idinvest has set up the Idinvest SME Academy, an innovative framework that accompanies its portfolio entrepreneurs in finding the right partners, experts and connections.

The academy has been particularly active in China, according to the fund.