International investment firm Cathay Capital has raised $1.4 billion in new funds with an eye on opportunities created by the pandemic-afflicted economy.
Cathay Innovation, the firm’s venture team, got $550 million in new financing, $230 million more than its inaugural fund from 2017. The firm’s private equity group, meanwhile, raised a new $850 million fund.
The venture team will be looking to invest across a variety of areas, including artificial intelligence, health care and online education, said co-founder Denis Barrier, who is chief executive officer of Cathay Innovation and based in Paris.
The current climate will still be a good time to invest, Barrier said in an interview. “When the economy is down, people are more willing to work with investors,” he said.
Cathay Capital, founded in 2007, invests in private companies across Europe, Asia, North America and Africa.
Its previous investments have included the Chinese e-commerce business Pinduoduo Inc., which went public in 2018 and now has a market value of more than $71 billion. Cathay Capital invested in Drivy, a French car rental marketplace that sold to Getaround Inc. for $300 million last year. The group is also an investor in luxury outerwear maker Moncler SpA and online banking startup Chime Inc., which is valued at $6 billion, according to PitchBook Data.
The venture fund was raising money this spring, as the coronavirus pandemic threw markets into chaos. The firm was fortunate that it already knew most of its investors beforehand, Barrier said.
The venture fund invests in mid-stage startups, usually those with $5 to $20 million in revenue, Barrier said. He said the fund plans to invest at typical valuations, despite current market volatility
“We don’t want to chase bargains,” he said. “We want to work with leading entrepreneurs in the best companies and provide capital at a fair price.”
Cathay’s private equity fund also sees opportunity in the current environment.
“We are looking at opportunistic add-on transactions for existing portfolio companies and durable business models that can withstand the shock that the economy is going through,” said Mark Woods, head of the firm’s North American private equity investing.