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CLSA private equity arm eyes small, mid-sized firms

The private equity arm of Asian investment bank, CLSA, has $700 million available to invest in small and medium-sized Asian companies in sectors such as real estate and consumer goods, an executive said on 23 May.

Josephine Price, deputy chief executive of CLSA Capital Partners, told Reuters in an interview that the money could be invested over the next two years if it finds the right deals at the right price in Asia’s competitive private equity market.
“We are in a very liquid market as there is a lot of private equity money and there is a lot of competition on pricing. So you have to exercise a lot of discipline,” she said, adding that the firm was betting on strong long-term growth in Asia’s consumer goods industries.
CLSA’s private equity arm has a total of $1.4 billion of institutional funds, half of which it has already invested in Asia. The firm typically commits its money for three to five years, she said.
Private equity firms are turning to Asia as they look beyond the competitive leveraged buy-out markets in the United States and Europe.
They invested a total of $25.2 billion in Asia last year, up by 19% from 2005, according to the Centre for Asia Private Equity Research. China netted some $4.6 billion, making it the biggest investment destination in Asia.
CLSA Capital Partners is the private equity arm of Hong Kong-based investment bank CLSA, which is controlled by French retail bank, Credit Agricole.
Price, who has been with CLSA for 10 years and previously worked as an investment banker at NatWest in Hong Kong, oversees CLSA’s ARIA Investment Partners, which has launched three pan-Asian funds.
Sweet deals?
ARIA funds invest primarily in unlisted companies in areas including consumer products, food processing, logistics and distribution, service industries, healthcare and manufacturing.
“We invest in companies which make goods and services within Asia. We think this is a sustainable story for the long-term,” Price said. “We take a stake, which could be a 15-20% stake, we take a board seat, and we help them to grow.”
One such firm was Petra Foods, a chocolate maker with operations in Indonesia and Singapore which listed in November 2004.
“It is now one of the top five industrial cocoa-ingredient businesses globally. It has bought businesses in Brazil, Mexico and more recently in Germany and France,” Price said.
CLSA Capital Partners bought a 20% stake in Petra Foods in 2001 for $15 million, and sold it four years later for roughly three times its original investment, Price said.
CLSA Capital has also invested in a power company and a chain of slimming clinics in India, as well as a Chinese fire-safety firm and a Shanghai-based asphalt-maker.
The $330 million ARIA Investment Partner III fund has invested $100 million over the past eight months and is looking to put the remainder into similar companies, she said.
CLSA Capital’s other funds invest in Asian real estate, Japanese companies, energy and water resources, transport, and a mezzanine capital fund.
Source : LiveMint

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