US-China trade war alerts top Beijing deal maker CDH to more buyout opportunities at home as foreign firms trim assets

CDH Investments sees more opportunities at home, if and when foreign multinationals pare their assets to minimise risk

Private-equity firm cites semiconductor and pharmaceutical sectors as key growth areas as China welcomes an influx of experts caught in spat with US

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Published: 1:40pm, 25 Oct 2019Updated: 1:45pm, 25 Oct 2019

CDH Investments is eyeing buyout opportunities at home, at a time when global companies are turning away from China to lessen the pain from a year-long trade war and geopolitical tensions.

The home-grown Chinese alternative investment group, which manages about US$20 billion covering private equity, venture and growth capital, is tracking potential targets that could be spun off by multinationals threatened by potential escalation in tariffs and military conflicts, according to Ren Yu, director of investor relations for the company.

“It is an opportunity we have been noticing, and we have been monitoring some of the pipeline deals,” she said in an interview in Hong Kong. “If there are good spin-off opportunities, we would love [to invest].”

Under the cloud of the US-China trade war, domestic players are seeing a pick up in deal prospects in the technology, manufacturing and health care sectors in particular, she added.

Beijing-based CDH, founded in 2002, made its name by backing top domestic groups that include the world’s largest pork producer, WH Group, and Mengniu Dairy. It also invested early on in Belle International Holdings, China’s largest women’s footwear retailer, which recently spun off sportswear arm Topsports International in an IPO that raised US$1 billion in Hong Kong.

Chinese enterprises are facing more resistance “going abroad”, accounting firm EY said in a report published in August. Overseas direct investment shrank 8 per cent in the first half from a year earlier. Mergers and acquisitions slumped 60 per cent to a seven-year low of US$20 billion. The travails of Huawei Technologies and ZTE, some of China’s largest technology firms, have also triggered rifts with its trade partners, ranging from Australia to the UK.