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Private equity

CICC to form up to $3.3 bn funds for bio, chips in Korea and others

Its PE firm is closing two funds with a combined commitment of $1.1 billion from some Korean conglomerates

By Jan 10, 2022 (Gmt+09:00)

CICC Headquarters in Beijing (Courtesy of Getty Images)
CICC Headquarters in Beijing (Courtesy of Getty Images)

CICC Capital, a private equity firm of China's largest investment bank China International Capital Corporation (CICC), will create funds with a combined worth of up to 4 trillion won ($3.3 billion) by the end of 2022. The PE firm will invest in South Korea’s growth sectors first and other Asian countries later, through CICC Ascent, its new joint venture with Korean investment firm Ascent Capital Partners.

CICC Capital is in the closing stage of forming two funds, worth 1 trillion won and 300 billion won, respectively, The Korea Economic Daily understood. Some of the largest Korean conglomerates have committed to the funds, but none of the Korean pension funds or insurers have participated. The Hong Kong-based PE firm will create more funds, increasing their combined worth up to 4 trillion won by this year.

The first investees will be 10 Korean corporates that are expected to create synergy in the Chinese market. CICC Capital is selecting the investee companies in the biopharmaceutical, semiconductor, new material and other industries. The Chinese PE firm will expand investment to other Asian countries, Korea's IB industry sources said. 

The investment is seen as part of accelerating Korea-Chinese businesses collaborations. Early January, Korea’s top chemical maker LG Chem Ltd. and the world’s largest producer of refined cobalt Zhejiang Huayou Cobalt Co. agreed to launch a battery material joint venture. The JV will produce cathode, a key ingredient for rechargeable batteries.

Last December, Korea’s carmaker SsangYong Motor Co. signed a memorandum of understanding with Chinese electric vehicle maker BYD Auto Co. to produce EV batteries. In the same month, Reuters reported China’s carmaker Geely Auto Group and France’s Renault Group will found a joint venture in a Renault Samsung plant in Busan, Korea, to produce hybrid cars and export them to the US duty-free.

Some Chinese corporates are considering investing in Korean semiconductor manufacturers, according to industry sources. Some of the leading chipmakers that don’t export to the US are on the top list of investees, the sources said.

Experts said the Chinese government is making efforts to strengthen its economic ties with Asian countries amid increasing feuds with the US. “It is a way to avoid the US’ drive to isolate Chinese technology firms”, said Ji Man-soo, director of the International Finance Research Division at the Korea Institute of Finance.

“China’s recent approval for Tesla to expand its Shanghai-based factory is a move to avoid economic isolation as well,” he added.

Write to Ji-Hoon Lee and Kyung-Mok Noh at lizi@hankyung.com

Jihyun Kim edited this article.

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