Abax Global Capital to raise RMB fund

Hong Kong-based asset management firm Abax Global Capital is to set up a RMB private equity fund to focus on environmental-friendly sectors such as alternative energy and clean technology, a source close to the firm has confirmed to PEI Asia.

The firm is targeting RMB500 million ($73 million; €51 million) for the fund’s first close in the next one to two months and a final close in the following six to 12 months. The source added that the fund is backed by a “major Chinese financial institution”, which will make a “substantial” investment. Abax will also invest in the fund.

The Hong Kong-based firm will join other foreign firms such as The Blackstone Group, CLSA Asia-Pacific, The Carlyle Group, First Eastern Investment Group and Prax Capital, which are raising funds denominated in RMB. This follows the introduction of a pilot policy in June, allowing foreign private equity and venture capital firms with operations in Shanghai Pudong New Area to set up wholly-owned local subsidiaries.

At present, the Abax fund is a “pure” onshore fund and will target domestic investors. However, the source said Abax would consider raising capital from international investors either through a joint venture fund or an offshore parallel fund structure in the future. It will primarily make pre-initial public offering investments and will seek exits on Chinese stock markets. 

According to the source, Abax intends to use the RMB fund to build a platform to enable multiple strategies to capture opportunities in the market. The firm’s flagship fund is a special situations fund, which is a hedge and private equity fund hybrid. That fund focuses on making PIPE transactions through convertible bonds or bonds plus warrants.

Financial services firm Morgan Stanley is a significant shareholder in Abax, which was set up in 2007. The firm invests primarily in China and Southeast Asia and currently has $300 million in assets under management.