China, 19 August 2009
Macquarie Group Limited (Macquarie, ASX:MQG) and China Everbright Limited (Everbright, HKSE:165) today announced that they have entered into a joint venture to establish two funds to invest in infrastructure businesses in Greater China with a focus on core infrastructure.
The first fund will be open to non-PRC, non-retail investors targeting Greater China core infrastructure opportunities, primarily in the toll road, airport, renewable energy, water and wastewater, port and rail sectors. These sectors in China are classified as “encouraged” under “The Catalogue of Industries for Guiding Foreign Investment” published by the Ministry of Commerce and the National Development and Reform Commission, the key national regulators. The second fund will be a domestic investment vehicle admitting Renminbi investors and its establishment is subject to PRC law and approvals. It is proposed for the two funds to co-operate and invest alongside each other and have identical mandates. The funds will be managed by Macquarie and Everbright through jointly owned asset management companies.
“Greater China is one of the largest and most diverse markets in the world and the market continues to offer enormous and rapidly expanding infrastructure investment opportunities,” said Chen Shuang, Everbright’s Chief Executive Officer. “China has a long history of private and foreign sector investment in infrastructure, with well developed national policies promoting infrastructure investment to improve business efficiency and national wealth, whilst encouraging foreign capital and operating expertise. The large flow of foreign direct investment has resulted in $67 billion of foreign direct investment into the infrastructure and related sectors in China as at the end of 2007. The importance of private capital in Greater China is demonstrated in the nearly 60 listed infrastructure operators with a combined market capitalisation of over US$150 billion.”
The international and domestic funds are seeking to raise US$1.5 billion in aggregate, with each targeting a first close in 2010. Macquarie and Everbright have committed to jointly contribute up to US$100 million as sponsors of both funds.
Macquarie and Everbright bring a strong combination of local and international infrastructure asset and funds management expertise to the joint venture. Macquarie is one of the largest infrastructure fund managers globally, with over 25 listed and unlisted funds managing over 100 infrastructure assets, with US$36 billion of infrastructure equity under management as of June 30, 2009.
Everbright is the Hong Kong listed subsidiary of the China Everbright Group, a Chinese state-owned enterprise and China’s first formally registered financial conglomerate. Everbright has been developing a wide range of investment funds management businesses in Hong Kong. Everbright is also the second largest shareholder of the Mainland-based Everbright Securities Co., Ltd., China’s ninth largest by brokerage market share in 2008, and the third largest shareholder of China Everbright Bank, China’s eleventh largest commercial bank by total assets as at December 31, 2008.
David Russell, Macquarie’s Head of Private Equity Asia and Greater China said: “The combination of Macquarie’s international infrastructure asset and funds management expertise and Everbright’s China experience and know-how will create a powerful investment partnership in China, especially in generating attractive investment opportunities. As a manager of infrastructure assets, we appreciate that governments, potential partners and vendors are attracted to managers with a history of responsible asset management and depth of expertise, together with an understanding and sensitivity to local issues.”
Mr Chen added: “Despite the global financial crisis, the IMF forecasts that the Chinese economy will continue to grow at 6 to 10 per cent per annum in the foreseeable future, and the rate of investment into infrastructure development is still believed to be amongst the highest in the world. We see many opportunities to bring international capital and asset management expertise to support this growth, to the benefit of investors and the country.”
“We are confident that Chinese infrastructure continues to offer attractive investment opportunities to both international and domestic investors and that our first mover advantage will contribute to our success,” Mr Russell said. He also emphasised that a key and unique feature of the funds and the Macquarie Everbright joint venture was the commitment to building a local business. “Particularly in Asia and our emerging market businesses, we are constantly reminded that key to the success of building sustainable, long term businesses is a commitment to being local. This requires a dedicated focus to the Greater China market, committing to employ and develop local staff, submitting to and abiding by Chinese laws and customs and treating Chinese government officials and businesses as long term partners.”
China Everbright Limited (Everbright), with China Everbright Group as its parent company, is a diversified financial conglomerate operating in both Hong Kong and Mainland China.
Established in 1997, Everbright persistently pursues a “3+2 Macro Asset Management” strategy, focusing on direct investment, asset management and asset investment, whilst developing fee-based businesses including investment banking (corporate financing) and brokerage services (wealth management). Over the past decade Everbright has developed solid market bases in various sectors and provided diversified services for its clients. The company has set up several securities brokerage, wealth management branches in Hong Kong, and subsidiaries in Shenzhen and Beijing. Everbright is the second largest shareholder of the Mainland-based Everbright Securities Co., Ltd. and the third largest shareholder of China Everbright Bank.
By leveraging the substantial financial strength of the company itself, and the position and influence of its parent company and affiliated companies in the financial industry in China, Everbright has weaved huge social and business networks in Hong Kong and the Mainland.
This release is prepared by Macquarie Capital Group Limited ("MCG") and China Everbright Limited ("Everbright"). It is for general information purposes only and does not constitute an offer, a solicitation of an offer, or any advice or recommendation to conclude any transaction. This release describes fund entities which are yet to be established and fund terms which may change prior to fund close. Establishment of the funds will be subject to all necessary internal and regulatory approvals.
While the information in this release is provided in good faith and derived from sources believed to be reliable, none of MCG, Everbright nor any other party makes any representation or warranty in relation to the accuracy or completeness, of the information. Forward-looking statements in this release reflect current views and assumptions with respect to future events and are subject to risks and uncertainties. Actual results and trends could differ materially from those described. Past performance is not indicative of future performance.
None of the Macquarie Group entities referred to in this release is an authorised deposit taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia), and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 ("MBL"). MBL does not guarantee or provide assurance in respect of the obligations of those entities.
MBL is authorised by the Australian Prudential Regulatory Authority in the Commonwealth of Australia to carry out banking business and to accept deposits in Australia. Each of MBL, acting through its London branch, and Macquarie Bank International Limited is authorised and regulated by the UK Financial Services Authority to carry on banking business and to accept deposits in the United Kingdom. Macquarie Group Limited and its related corporations are not otherwise currently authorised to carry out banking business or to accept deposits in any of the Asian jurisdictions.