Hong Kong-based private equity firm First Eastern Investment Group plans to invest in a Wall Street bank as part of a strategy to build its presence in every major global financial hub, its chairman Victor Chu said.
First Eastern in March acquired the investment banking unit of London-based Evolution Group Plc.
In the U.S., we will either buy, control or just invest in a Wall Street merchant bank, Chu told Reuters in an interview.
We're going through that process right now. We're looking at options.
First Eastern already owns investment banking licenses in Hong Kong, London and Dubai, so buying into a U.S. bank would expedite fund-raising by its mostly mid-sized clients, Chu said, without identifying potential targets.
First Eastern's expansion plan reflects increasing demand from Chinese private firms to raise money and grow businesses overseas.
The acquisition of U.K.-based Evolution Securities China followed First Eastern and Richard Branson's joint bid for British mortgage lender Northern Rock Plc in 2007.
Chinese companies want to go global, Chu said. Big guys go to Goldman and Morgan Stanley. But in the mid-market sphere, there are so many companies, and First Eastern could be a viable choice.
China-focused First Eastern, which Chu founded two decades ago, said on Monday that it aimed to raise 6 billion yuan ($878 million) in local-currency funds in China, after becoming the first foreign private equity firm allowed to set up a Shanghai-incorporated subsidiary.
French brokerage CLSA and U.S. buyout firm Blackstone Group LP also announced plans recently to launch yuan funds.
First Eastern plans to launch three funds within the next 12 months that will invest respectively in small- and medium-sized enterprises, environmental protection industries and government-sponsored infrastructure projects, Chu said.
The infrastructure projects under the national stimulus plan should not just be done by the public sector, Chu said. We should have the private sector to co-invest -- domestic or even international investors, because they bring in different kinds of expertise, oversight and governance into the equation.
First Eastern, which has strong ties with local governments in China, has already invested in more than 100 projects in the country covering infrastructure, light industries, real estate and financial services.
Obtaining the license to raise funds locally gives First Eastern access to another pool of liquidity, more investment opportunities and helps it avoid currency risks and bureaucracy, Chu said.