Equity investment in the Cathay Small Cap III fund to support the development of French SMEs in China

Cathay Capital Private Equity SAS (“Cathay”) is a French company specialized in asset investment and management in Europe and China. It was set up in 2006 by a Chinese entrepreneur, Mingpo Cai, and a French investor, Edouard Moinet. In 2007, Cathay raised its first fund with Proparco’s support. Cathay Capital I aims to support (i) French SMEs (smallcaps) seeking to develop in China or (ii) conversely, Chinese SMEs seeking to develop partnerships with French groups. Building on this initial success, Cathay has become a leading player in cross-border investment between China and Europe. Its team of over 50 people in 6 offices currently has over EUR 1bn under management.

The operation involves a EUR 10m equity investment in Cathay Small Cap III by Proparco. Cathay III targets significant minority or majority shareholdings. The fund will target companies with real international development potential seeking to develop on Cathay’s target markets. The investments will mainly be split between China and France and, more marginally, will be made in the rest of Europe. The objective is still to actively support the development of French SMEs in China, as well as Chinese companies on their domestic market, by giving them the opportunity to capitalize on the experience of Western SMEs.

The main quantitative impact expected from the project involves job creation: we estimate that the project will create over 5,000 jobs in China. There will also be a number of qualitative impacts: support for internationalization processes, investment in sectors deemed to be priorities by Proparco, and support for the client in the implementation of appropriate environmental and social risk management, which has not yet been formalized.