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

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 this year. The PE manager will prioritize investing in South Korea’s growth sectors, The Korea Economic Daily understood.

The Beijing-based investment firm is finalizing the creation of two funds, respectively worth 1 trillion won and 300 billion won. Some Korean conglomerates are among the limited partners of the funds, according to sources. 

The PE manager will form more funds to increase the combined worth up to 4 trillion won by the end of this year, sources said.

CICC Capital will invest in 10 Korean firms in the bio, semiconductor and new material sectors that have growth potential in the Chinese market. The PE firm will expand its investments in companies in other Asian countries. 

The investment is expected to extend the Korea-China business partnerships that have recently increased.  

In early January, Korea’s top chemicals firm LG Chem Ltd. and China's Zhejiang Huayou Cobalt Co. agreed to launch a battery material joint venture. The JV will produce cathode, a key ingredient for electric vehicle batteries.

Last December, Korean carmaker SsangYong Motor Co. signed a memorandum of understanding with Chinese EV producer BYD Auto Co. to produce batteries.

In the same month,  China’s Geely Auto Group and France’s Renault Group agreed to establish a JV in a Renault Samsung plant in Busan, a major port city in Korea, to produce hybrid cars and export them to the US, Reuters reported.

Some Chinese firms are considering investing in Korean chipmakers that have no US client, industry insiders say.

CICC Capital's investment is led by the growing importance of Korea in the global supply chain, market insiders say. The Chinese government puts more emphasis on economic alliances with its neighboring countries than before as trade disputes with the US intensify, market watchers added.

“China has to create close relationships with other nations to prevent its economic isolation driven by the US. The largest Asian economy has approved Tesla's first overseas factory in Shanghai to avoid such isolation,” said Ji Man-soo, director of the International Finance Research Division at the Korea Institute of Finance.

Write to Ji-Hoon Lee and Kyung-Mok Noh at lizi@hankyung.com
Jihyun Kim edited this article.