BEIJING - The New York-based investment firm Riverwood Capital Co has just raised $800 million and signed a strategic cooperation agreement with a Chinese counterpart on Tuesday to help grow medium-sized high-tech companies.

Nicholas Brathwaite, a founding partner of Riverwood Capital, said they have just completed raising capital for the Riverwood Fund, the company's second fund, and China will be the main target of investment.

Brathwaite said that Beijing-based Orient Jiyi Investment Co Ltd, formerly called Dongfang Jiyi Asset Management Co, is experienced in local operations and it will set up a joint management mechanism to study companies and find candidates for investment.

"Because Riverwood Fund has a lot of institutional investors, we are required to look for medium-sized companies in technology, services and software sectors," he said.

The fund's major investors include the electronics manufacturer Foxconn Technology Group, the merchant banking group China Development Financial Holding Corp, and the private equity firm Kohlberg Kravis Roberts & Co.

Brathwaite added that the firm's $200 million first fund, Bigwood Fund, has been used.

Bigwood's capital was raised mainly from individual investors, so its investment field was wider.

"We invested in 16 portfolio companies with Bigwood Fund, and seven of them are Chinese. So we show confidence in the Chinese market for the newly raised one," he said.

According to Brathwaite, the investment period is usually from three to five years and can be slightly longer depending on the strength of the companies.

"Our expected internal rate of return for a company is 30 percent," he said.

Under a plan approved by the State Council, Zhongguancun - Beijing's technology hub - will achieve total annual revenue of 10 trillion yuan ($1.54 trillion) in 2020, compared with 1.3 trillion yuan in 2009.

Yi Jigang, president of Orient Jiyi Investment, told China Daily that it has received strong support from the Zhongguancun Development Group, and it will look for potential companies in that area with Riverwood Capital.

"Riverwood has a strong industry integration capability," Yi said.

China Daily

(China Daily 05/19/2011 page15)