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Mergers & Acquisitions

Beijing buyout firm Everpine Capital in deal to bring cargo drones to China

By investing in Czech Republic-based light-aircraft maker, Everpine seeks to drastically lower costs of cargo traffic, especially in China’s mountainous regions

PUBLISHED : Thursday, 01 February, 2018, 6:09pm
UPDATED : Thursday, 01 February, 2018, 6:09pm

Jerry Lou, founding partner of Beijing-based but global buyout fund Everpine Capital, sees drones as more than just a tool for parcel dispatch for online shoppers; or expensive toys for deep-pocket enthusiasts.

In two years’ time, he envisages them to have become integral parts of the cargo industry, able to carry as much as 500 kilograms of goods such as food or medical supplies, for instance, to inaccessible, mountainous regions of China.

Everpine is currently in the process of finalising a controlling-stake investment in Distar Air, a Czech Republic company that designs “Samba” light aircraft.

He and other partners in his fund plan to convert two-seat Samba light touring aircraft into drones capable of reaching even the highlands of Tibet, Xinjiang and Qinghai provinces – traditionally challenging for land traffic.

Post acquisition, the fund will invest further in applying and commercialising the technology in the Chinese market, which should deliver solid returns to Everpine’s investors.

He is confident the ultimate cost of running the company’s planned cargo-drones will be “the same as running a truck”.

To Lou, the investment is an example of how private equity can change the definition of technology, given how heavy lifting drones today can still only carry payload of less than 50 kilos.

The opportunity set for us is really simple. By allocating private capital, we want to bridge the best of world technology, that can be applied to Chinese industries, and enhance their productivity to fulfil the needs of the domestic market
Jerry Lou, founding partner of Beijing-based but global buyout fund Everpine Capital

“The opportunity set for us is really simple. By allocating private capital, we want to bridge the best of world technology, that can be applied to Chinese industries, and enhance their productivity to fulfil the needs of the domestic market,” said Lou.

Just four years old, Everpine manages both US dollar- and yuan-denominated funds totalling US$2 billion, and focuses on small- to mid-market buyout opportunities in Europe and North America, worth between US$20-50 million.

Typically, Everpine then invests another US$100 million post-acquisition, on deploying any technology it acquires, within China.

Before creating the fund, Lou helped build Morgan Stanley’s China research division as its managing director based in Hong Kong and Shanghai and has worked both as an analyst and chief strategist covering the automotive, consumer and conglomerate sectors. Before that he was Templeton Asset Management’s deputy vice-president in Shanghai.

Apart from applied technology, the fund also focuses on three other sectors: education, life and culture, and health care service.

On health care, for instance, in 2014 it invested 25 million (US$31.08 million) in Eye Tech Care, a Lyon-based company that develops and markets equipment for non-invasive glaucoma treatment.

That gave Everpine a controlling-stake in the company, and the global patent to a therapeutic device and underlying technology, which is based on high-intensity, focused ultrasound.

Everpine sees big market potential in China for the technology, where 22 million people suffer from glaucoma – a significant 28 per cent of the people affected by the pathology globally. Yet, there are less than 300 certified doctors who can treat the disease, which can lead to blindness.

The technology, which can treat patients in just three minutes, was approved by the China Food and Drug Administration last year and Everpine is now helping with its national roll-out.

Lou sees asset valuations in Europe and the US at much more “reasonable” levels than those in China, making domestic buyout opportunities less attractive.

Lou was speaking on the sidelines of 2018 Family office solutions showcases & co-investors workshop held in late January.

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