DIC links with First Eastern in fund drive

DIC links with First Eastern in fund drive

By Justine Lau in Hong Kong

Published: April 13 2008 22:30 | Last updated: April 13 2008 22:30

Dubai International Capital and Hong Kong-based First Eastern Investment Group are establishing a $1bn fund to invest in Chinese companies seeking to both do business in the Gulf region and to list in the emirate.

The launch of the fund comes days after meetings between Dubai’s ruler Sheikh Mohammed Bin Rashid Al Maktoum and top Chinese officials, including president Hu Jintao.

The fund’s aim is to tap growing ties between China and the Middle East. Armed with hefty oil revenues, Middle Eastern investors are searching for investment opportunities. China, is looking to the Middle East for stable energy supplies.

Victor Chu, chairman of First Eastern and an non-executive director of DIC, told the Financial Times that the fund would try to “ride on the momentum” of closer relationships between the two regions.

The fund, called China Dubai Capital, also underlines DIC’s strategy and ambition to grow in Asia.

DIC – Sheikh Mohammed’s private equity vehicle – has said that Asia will account for almost a third of its overseas investments.

The fund plans to invest $25m-$50m for strategic minority stakes in 20 to 40 unlisted companies in China. It hopes to bring some of them to the Dubai stock market, where no Chinese companies are listed.

The fund will focus on sectors such as infrastructure, resources and services with target returns of above 20 per cent a year.

First Eastern has been operating in the Gulf for some 15 years and was the first Chinese institution to obtain a licence to operate from the Dubai International Financial Centre in 2006.

DIC has committed to underwrite $500m in the first closing date of China Dubai Capital in May. First Eastern has committed to invest $30m. The final closing date of the fund is scheduled for October.