Companies

Fosun building overseas presence

By Zhang Qi (China Daily)
Updated: 2011-03-09 10:09

Fosun Group's office building in Shanghai. The company has been tapping into the overseas market by establishing a $100 million yuan-denominated private equity fund last year. [Photo / China Daily]

Plans to invest in consumer goods, luxury and food chains sectors

BEIJING - China's private conglomerate the Fosun Group will raise more funds this year to put into the luxury, consumer goods and food chain sectors overseas, a move in keeping with the company's ambition to expand its overseas presence.

"Aside from the fund with Prudential Financial, we are talking with other investors to attract more investment this year," Guo Guangchang, chairman of Fosun and a deputy of National People's Congress, said at the annual national legislative meeting on Tuesday.

The company, which has business interests ranging from real estate to medicine, formed a $600 million private equity fund in January with Prudential Financial of the US to invest in Chinese companies listed overseas, foreign firms with operations in China, and domestic companies.

Guo said Fosun now holds close to a 10 percent stake in the French resort group Club Mediterranee SA.

In June, Fosun announced that it had bought a 7.1 stake in Club Med for 25 million euros ($34.81 million) and that it intended to increase the holding to 10 percent.

"Fosun is looking at overseas investment opportunities in the luxury, consumption and food chain sectors," Guo said. "In the long-term, we are also looking for overseas mining resources. However, the prices are relatively high and now is not the best time to invest in overseas resources. "

"However, there are still some investment opportunities in the resources sector, and we should size up the situation and be cautious when entering the business," he said.

Fosun, whose main business divisions are in the real estate, pharmaceutical, steel, mining and retail sectors, has invested in listed companies including Zhaojin Gold, Nanjing Steel United, Forte Land, and Fosun Pharmaceutical.

The company has been tapping into the overseas market in the past year, establishing a $100 million yuan-denominated private equity fund with the US-based private equity group Carlyle Fund and investing in the Club Med resort group.

Its 50-50 joint venture with Carlyle targeted high-growth Chinese companies and investment in overseas markets.

The Club Med investment helped the French company expand in China - the first Club Med resort in the country opened in Heilongjiang province following the announcement.

Fosun CEO and Vice-Chairman Liang Xinjun said in an earlier interview with Caijing News that Fosun's goal is to be more like Warren Buffett, transitioning from an industry group to an investment group.

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Since 2007, Fosun has invested in more than 100 companies, more than 20 of which are listed.

Liang said Fosun is eager to invest in the US and Japanese real estate markets, according to the Caijing report.

The company has opened offices in major international cities including New York, London and Tokyo. It has formed international investment teams, and even hired a former US Treasury Secretary, John William Snow, to advise its board of directors.

Guo estimated that in the next three years, one-third of Chinese privately owned companies will set up distribution networks overseas, and one-fourth of those will establish branches in overseas markets, with around 15 percent investing in factories abroad.

China now has more than 7.5 million privately owned companies.

Unlike State-owned companies, which may have easy access to credit going overseas, privately owned Chinese companies face bottlenecks in credit financing, brand recognition, and industry selectivity as they invest overseas. Guo urged the government to provide guidance to support private companies going abroad.