Everbright Overseas Infrastructure Investment Fund LP
Everbright Overseas Infrastructure Investment Fund LP (the “Fund”) is a fund targeting infrastructure investment opportunities globally. With first close in June 2017 for USD300 million, the Fund has a target size of USD1 billion.
The Fund is managed by indirect wholly owned subsidiaries of China Everbright Limited. There are two seed assets in the Fund, which were contributed in kind by China Everbright Limited.
Approximately USD150 million was invested in the two seed assets: 100% of the concession for Tirana International Airport in Albania; and an optical fibre network company in Hong Kong. These two seed assets showcase the investment style of the Fund and are able to generate solid cash yield with low risk for our investors.
The Fund primarily invests in equity and equity-linked securities of companies or projects located in Europe, North America and Asia-Pacific areas. Investment opportunities in other areas such as South America and Middle-East areas may also be considered.
The Fund targets to invest between USD50 million and USD200 million for a single investment. Investment targets should have excellent management team, good operating track record and strong recurrent cash flows so that investors in the Fund can enjoy both a satisfactory cash yield and long-term capital appreciation.
The target industries include, without limitation, roads (including toll roads, bridges and tunnels), transport terminals (including airport terminals and related facilities), railway stations and similar, sea and shipping ports, communication towers, water distribution networks, wastewater networks, water and wastewater treatment facilities, power generation facilities, power transmission and distribution networks, oil and gas storage facilities, oil and gas distribution networks, etc.
As the parent company of China Everbright Limited, China Everbright Group’s business mainly includes retail banking, securities, insurance and asset management. Meanwhile, the group is also engaged in infrastructure related industries, such as environmental protection, waste-to-energy, property management, clean energy, aviation, etc. The Fund can leverage the knowledge and network of the group in deal sourcing, technical know-how, operational improvement, and capital structure optimization to create synergies. Since 1980s when the reform and opening-up of China started, China Everbright Group expanded its footprint to Hong Kong. With years of overseas investment and asset management experience, the group is able to provide a strong support for the fund’s global strategy.
China’s “One Belt One Road” strategy could comparatively give the Fund better access to opportunities along the countries covered by the Belt Road strategy.
The investment team is made up of seasoned investment professionals with experience from big corporates, bulge bracket investment banks and top tier private equity funds. Having gone through the full market cycles, the team has accumulated extensive experience from investment, post-investment management to exit, and demonstrated its capability to identify attractive investment opportunities and achieve an exit with risk-adjusted returns.
Tirana International Airport
The Fund owns 100% of the concession right to operate the Tirana International Airport, which is the only international civil airport in Albania.
The country has a population of 2.9 million and land area of 28,000 square kilometres. It has a democratic electoral regime, and is a member of the NATO as well as a candidate member of EU. A majority of law and policies are in compliance with EU standard, and it has a vetting process of all judges and prosecutors to be monitored by EU.
Since the Fund invested, the airport has opened new routes to Amsterdam and Budapest. The airport served 20 destinations and achieved 2.6 million passengers in 2017. The management expect the number of passengers to increase by 11.5% in 2018.
The passengers are mostly locals who work overseas and travel home to visit family and friends, which provides a very stable passenger flow. Albania also has a high potential to develop international business, tourism and logistics in the future. Albania’s among the 21 Best Places to Visit in 2018 according to National Geographic Travel. It is on its list of the 10 best holiday destinations in Europe by Lonely Planet.
Village Telephone Limited
The sole provider of last mile optical fiber network for 600 villages in New Territories.
The company is currently raising a new round of funding with aim to expand the network to other areas in New Territories, and the ultimate goal to cover the entire urban areas in Hong Kong as well.
According to the statistics from Planning Department, the population in New Territories will increase from 3.78m in 2014 to 4.27m in 2024, circa 54.6% of total population, creating an increasing demand for high-speed internet services.
The Hong Kong government expects the 5G services to roll out as early as April 2019. The upcoming 5G has let to inflated valuation of telecommunication companies. As the fundamental component of 5G deployment, optic fibre is critical to making Hong Kong a smart city and laying the groundwork for IoT.
The Fund expects the company to be listed in Hong Kong in 2020.
The major business of the company is underlined by transport services contracts covering ferries, buses, and light rails with the Public Transport Administrators, which generally have a concession period of 8 to 10 years with an option to extend by up to 2 years. Revenue from these contracts depends not on patronage but service coverage, adjusted regularly based on inflation, labour wage and fuel cost fluctuations, hence unaffected by traffic volume or inflation.
The company has been continuing improving its operational efficiency and optimising its contract portfolio with EBITDA margin increasing from 10.4% in 2015 to 23.1% in 2017. There is a sizable ferry contract which will take effect from 2020, hence the EBITDA in 2020 is expected to be 50% higher than 2017.
The company is in the process of deploying electric ferries, and in development of fuel cell as its ferries’ power source, which both involves cutting-edge technology not deployed elsewhere in the world yet.
Mr. Hu is Managing Director of the Overseas Infrastructure Fund Department, China Everbright Limited (CEL) and sits on the Investment Committee of Everbright Overseas Infrastructure Investment Fund LP. He possesses over 20 years’ of investment experience. He served as Assistant General Manager of the investment management department of China Everbright Group (Hong Kong), Investment Committee member of Citicorp Everbright China Fund. He was responsible for managing China Everbright Group (Hong Kong) ‘s overseas investment assets between 1998 and 2006. Prior joining the Fund, Mr. Hu was the General Manager of the Strategic Investment Department of the China Travel International Investment (H.K.) Limited (CTII) and a deputy general manager of CTII’s subsidiary in China, responsible for CTII’s cross border investment, corporate strategy, performance management and corporate governance.
Mr. Hu Holds a bachelor degree in Business Management in Guangzhou Zhongshan University and an MBA from Baylor University of US. He is a member of CFA and a member of ACCA.
Mr. Hu is Managing Director of the Overseas Infrastructure Fund Department, China Everbright Limited and sits on the Investment Committee of Everbright Overseas Infrastructure Investment Fund LP. He possesses more than 20 years’ experience in Corporate Finance and Direct Investment. Prior joining the fund Mr. Hu was an Executive Director from J.P. Morgan Asset Management Real Assets (Asia) Limited in charge of an Asian infrastructure fund’s investments in Greater China. He was a Director at Capital China Holdings Limited, responsible for investments in infrastructure and financial sectors in China. He was also a Director at Emerging Markets Partnership, managing AIG infrastructure funds’ investments in Greater China.
Mr. Hu holds a Bachelor Degree in Economics from the University of Hong Kong and a Master Degree in Business Administration from the Chinese University of Hong Kong. Mr. Hu is a charter holder of CFA.
Mr. Poon is Executive Director of the Overseas Infrastructure Fund Department, China Everbright Limited and sits on the Investment Committee of Everbright Overseas Infrastructure Investment Fund LP. He possesses more than 15 years’ of investment experience. Prior joining the fund he was a Senior Vice President at Macquarie Everbright Greater China Infrastructure Fund, responsible for Investment, Asset Management, Fund Raising and participated in the Investment Committee. He was also the IC Observer for Everbright Ashmore Real Estate USD Fund. In 2004, Mr. Poon joined Lehman Brothers and worked at the Tokyo and HK office of the Global Real Estate Department. Later, he served as Vice President in Nomura International, in charge of the underwriting business for the mezzanine syndication related to the infrastructure industry across Asia-Pacific region. Kelvin also worked for PricewaterhouseCoopers.
Mr. Poon graduated from the Macquarie University, major in Finance and minor in Actuary. He is a charter holder of Australia CPA and HKICPA in 2001 and 2002 respectively. Mr. Poon also received a Diploma in Civil Law awarded by Tsinghua University and Hong Kong University in 2003.
Investment Vice President
Mr. Cheng is the Investment Vice President of the Overseas Infrastructure Fund Department, China Everbright Limited. He possesses more than 12 years’ experience in assessment of investments. Prior to joining the team, he worked in Singapore office of Platinum Equity, a leveraged buyout fund specializing in operational improvements of businesses, covering investment opportunities in Asia focusing on Greater China. Earlier in his career, Mr. Cheng advised potential corporate and institutional investors on investment opportunities during his spell in KPMG Hong Kong and New York, with his latest position as associate director in deal advisory team in Hong Kong.
Mr. Cheng graduated from The Chinese University of Hong Kong majoring in Economics, and is a CPA in the US and Hong Kong, as well as a CFA charter holder.
Mr. Lau is Senior Associate of the Overseas Infrastructure Fund Department, China Everbright Limited. He possesses more than 7 years of investment related experience. Mr. Lau started his career as a Financial Analyst in an Investment Management company based in London, covering infrastructure, real estates, hotels and resort, student accommodations and town redevelopment. Returning to Hong Kong, he continued his career with the same organization as a management consultant and for one year as an Aviation Business Consultant. Mr. Lau has started his career in Private Equity in 2013 through joining a boutique family office with its headquarter in United Kingdom mainly focusing in property investment in particular data centres, schools, warehouse and storages.
Mr. Lau graduated from the University of Hong Kong in 2010 holding a degree in Real Estate and Finance.
Mr. Xu is Associate of the Overseas Infrastructure Fund Department, China Everbright Limited. Before joining Everbright, Mr. Xu was working in a family office based in Hong Kong, responsible for private equity and venture capital fund investments, direct investment in early-stage TMT companies as well as advising Asian institutions in acquiring overseas real assets.
Mr. Xu graduated from the Chinese University of Hong Kong, major in Insurance, Financial and Actuarial Analysis, and is a charter holder of FRM.