latest beneficiary of western investors' enduring love affair with
China is ARC Capital Holdings, the London-listed fund manager that
focusses on Greater China.
Its second round of fund-raising,
just completed, received “overwhelming demand” and was approximately
2.5 times oversubscribed. Consequently, the placing has been sized at
the upper end of the target range at US$375m.
ARC Capital targets investments in the retail, consumer products and
services sectors — areas which are destined to benefit from China's
rising incomes and and, longer term, the secular shift away from
manufacturing. Rachel Chiang, Managing Director at ARC Capital says:
The retail and consumer sector in China is a very exciting area to
be investing in right now. Not only is the sector growing at a
phenomenal rate but the development of brand awareness and loyalty
means that a number of companies will begin to emerge that will be
leading players first in China, and then internationally.”
One of its earliest investments is Goodbaby Group,
China's market leader in baby strollers and other baby equipment. While
China's one-child policy might at first sight seem to dampen prospects
of this market, foreign investors apparently think otherwise. Within a
year of listing in HK, Goodbaby was taken private in 2006 by Pacific
Alliance Group in a $122.5m deal — the first known leverage buyout in
Last month, it was reported
that Mothercare, the UK-based leader in childcare, was now interested
in taking a stake in Goodbaby and setting up a a Chinese JV with the
company, which is located in Kunshan, Jiangsu province.
As well as Goodbaby Group, ARC's other lead investments include Shanghai Jiadeli Supermarket Co and Ningxia Xiajin Dairy Group.
It makes products and services for the automotive aftermarket and
also supplies OEM parts to carmakers such as SAIC Volkswagen,
Brilliance, Chery and Dongfeng.