GLOBAL - The China Investment Corporation (CIC) has teamed up with two other investors to establish a fund that will invest in European groups with strong growth potential in China.

The sovereign wealth fund - together with the Belgian Federal Holding and Investment Company and private equity firm A CAPITAL - achieved a first close on the Belgium-China Direct Equity Investment Fund earlier this week.

André Loesekrug-Pietri, chairman at A CAPITAL, told IPE the three partners aimed to raise at least €250m, but hoped to increase this to as much as €2bn.

"The size of the vehicle will depend on market conditions," he said. "Given the current turbulence, we will have to see whether €2bn is a realistic target."

According to the partners, the vehicle - which will invest in leading European brands, technologies and distribution channels - will target European mid-cap companies with revenues of more than €100m.

Loesekrug-Pietri said the fund would invest in 10-12 companies over the next four years, making investments of between €20m and €40m in each company. 

Once the fund has selected companies, it will invite strategic private and state-owned co-investors in China to "unlock" their growth potential.

"Outbound investment has become a must for many Chinese companies that need to move up the value chain," Loesekrug-Pietri added.

Lou Jiwei, chairman at CIC, said the partnership would allow the sovereign wealth fund to boost its exposure to leading European companies.

"This commitment is consistent with CIC's strategy to look for long-term investment opportunities in European market leaders," he said.

The partners hope to reach a second closing in the coming months, while a third and final closing could be achieved by the end of this year, according to Loesekrug-Pietri.

The CIC and the Belgian Federal Holding and Investment Company will be limited partners in the fund, while A CAPITAL will be general partner.

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