China’s top private equity firm seeks stronger Middle East ties in hard tech, renewable energy, EVs

Hermitage Capital is in talks with wealth funds and investment authorities to set up a Middle East private equity fund, senior executive says

Saudi Arabia is seeking to reduce its economic dependence on fossil fuels and ‘rapidly building a tech-driven start-up community’, Henry Zhang says

Reading Time:3 minutes

Digital City in Riyadh, Saudi Arabia. Photo: Natalie Wong

Published: 5:00pm, 3 Oct 2023

China’s top private equity firm is seeking to strengthen its ties with the Middle East in the “hard tech” and electric vehicle (EV) sectors, as the region quickly emerges as a land of opportunities amid escalating geopolitical tensions between China and the US.

Hermitage Capital, a Hong Kong and Shanghai-based investment firm with US$1.5 billion in total assets, is in talks with sovereign wealth funds and investment authorities in the Middle East to set up a private equity fund dedicated to helping Chinese and global portfolio companies in the hard tech space to expand into the Middle East, with a focus on Saudi Arabia.

“Obviously, Saudi has the capital,” said Henry Zhang, president and managing partner at Hermitage Capital. “A lot of [general partners] and tech start-ups go there to raise funds, but what they don’t realise is that the country is also a very good market that’s underpenetrated.

“In the past, Saudi was very focused on their natural-resources and petrochemical industries. Now, they’re seeking to reduce their dependence on fossil fuels and rapidly building a tech-driven start-up community.”

Henry Zhang, president and managing partner at Hermitage Capital. Photo: Handout

The term hard tech, or deep tech, refers to breakthrough technologies that solve large-scale engineering, environmental and societal challenges, with the potential to impact everyday life. Such solutions usually require extensive scientific research and capital investment.