Hainan Zhenghe Commits $130M To First Reserve Fund

Shanghai-listed Chinese commercial property firm Hainan Zhenghe Industrial Group Co. Ltd. has agreed to commit US$130 million to U.S. energy private equity firm First Reserve’s latest fund, according to a regulatory filing submitted by Hainan Zhenghe.

The commitment is for First Reserve Fund XIII, which is currently on the road to raise a total of US$5 billion. The fund is to invest in heavy manufacturing, mining and metals, and utilities sectors.

The investment is part of a broad strategic agreement between the two parties. Hainan Zhenghe, based in Hainan province, says it will also invest up to US$800 million to projects that First Reserve has already invested in.

In addition, First Reserve and Hainan Zhenghe will jointly form and co-manage an investment fund, which is to be registered in China. The fund will focus on investing in oil exploitation and development projects in China and Central Asia.

Lastly, two companies will work together on energy sector deals, such as co-investments and M&A.

First Reserve, with offices in Greenwich Connecticut, Houston, Texas, London and Hong Kong, has raised over US$26 billion in capital in total. As of September 30, 2013, the firm has an internal rate of return (IRR) of 32.3%, according to Hainan Zhenghe’s filing.

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