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By Bloomberg News
(Bloomberg) -- BHR Partners, a state-backed Chinese private-equity firm specializing in deals outside the country, aims to complete as much as $3 billion of investments by the end of 2016, doubling the value of a portfolio that includes a U.S.auto-parts maker.
The Beijing-based firm, set up in 2013, is targeting deals worth at least $500 million in industries including health care,high-end manufacturing, traditional media and finance, Chief Executive Officer Jonathan Li said in an interview on Tuesday.
“We have already invested $1.5 billion so far and that’s quicker than expected,” Li said. “Our advantage is that we have deep-pocketed shareholders and investors who would want us to invest in more projects and spend more money.”
Earlier this month, BHR joined with state-owned Avic Automobile Systems Holding Co. to acquire Henniges Automotive, which makes door and hood seals for automobiles, for about $600 million.
The PE firm was set up by Bohai Industrial Investment Fund Management Co., Harvest Fund Management Co. and U.S. funds RSB LLC and Thornton LLC. Bohai Industrial was the first renminbi private-equity fund approved by China’s State Council and its shareholders include some of China’s largest financial institutions such as Bank of China Ltd. and China Life Insurance Co.
Geographically, BHR is more keen on U.S. and Europe, where companies generally have more mature business models, brands and technology, Li said. Valuations in those two regions are also lower than in China, said Li, a lawyer by training who has had a 25-year career in investment banking and investing.
The firm may be close to completing a deal in the traditional media industry, which it favors over newer media businesses that have yet to build viable earnings models, Li said.
“Hopefully, I can have something to tell you in two months,” he said.
BHR hasn’t been able to make investments as quickly as it has hoped as competition from other Chinese private-equity firms often drives up valuations in cross-border transactions, Li said.
“Cross-border M&As in China are a bit overheated,” he said.“Often times we will be competing in an all-Chinese bidding process and everybody will start bidding up the price.”
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--With assistance from Ling Zeng in Shanghai.