China's Number One Company Hunter

The investment company Mandarin has bought companies in Italy with money from Bejing. Now it’s Germany’s turn.
Alberto Forchielli loves the crisis, and he likes Germany. Not because he was so optimistic about the economy of the country, but on the contrary: he predicts a severe crisis and wants to benefit from it.
“I am convinced that the euro zone will all break apart,” says Forchielli, 57, tall, heavy, bald, and with the vocal strength of an opera tenor. “If countries like Italy or Spain leave the monetary union, they will be devalued and German companies will suffer,” says Forchielli. In English, he adds: “Germany stands to lose the most. The outlook for you is ‘low’,” And that means the value of the companies will decrease.
Forchielli is a company hunter on behalf of the People’s Republic of China. The Italian, who lives in Shanghai, has an office in Milan, and spends the summer months in Imola, is the co-founder of the private equity firm Mandarin Capital Partners, the largest private equity firm that invests Chinese money in Europe. Its main investors are the China Development Bank, the Export-Import Bank of China, and the Italian Bank Intesa Sanpaolo. Forchielli acquired companies in Northern Italy with the money from the first fund. With the second fund, which has a volume of about 1 billion Euros, he is targeting the German small firm sector. He wants to invest two-thirds of the sum in Germany. It is a bet that Europe’s debt crisis will soon also reach there.
China is moving around the globe in order to get cheap technologies and well-known brands, and the government in Beijing forces takeovers abroad. The China Development Bank is furthermore involved in the Infinity Group and the China-Africa Development Fund. Recently, the Chinese launched a fund in Shanghai that should purchase overseas companies with 50 billion Yuan (6.3 bln. Euro).
The entry of Mandarin Capital in Germany is on the agenda for 2013. The office will be opened either inMunich or Frankfurt.
“To 80 percent in Munich,” says Forchielli, which will be in Germany in September.
Forchielli already has in mind the criteria for a target company: 80 million to 200 million annual sales, and the management should remain on board when Forchielli comes. In what kind of industries is he interested? Health, oil and gas and fashion markets are interesting, as well as specialists who work with the quality of food and water.
Forchielli can look back at a long career. He worked at the Italian State Bank Iri managing privatizations. He later worked for the World Bank and the European Investment Bank (EIB), where he supervised the Balkan region.
In China, he is a little star; his blog is among the Top Ten of the most-read on the news website Caixin, and the Italian has nearly 200.000 readers.
“I organize conferences for the Communist Party. They call me, when they need an assessment” says the company hunter and capitalist. According to Forchielli, Mandarin has not lost any money so far. This spring the fund gave the majority from the pharmaceutical company Euticals to the holding company Clessidra. They tripled the initial investment, he says. Now they are preparing the exit from Gasket, a supplier for the oil and gas industry near Bergamo.
“At what price do we want to sell?” he asked his employee Federico, who obviously didn’t want to answer the question in front of a journalist.
An internationally well-known participation of Mandarin Capital is Dagong. The fund holds 40 percent of the Chinese credit rating agency that aims to compete with Standard & Poor’s, Moody’s and Fitch. The credit guardians are still waiting for the green light of the European authority ESMA. Dagong wants to place five to six analysts in Europe.
“The companies and banks that want a rating are already standing in line,” says Forchielli. “And we do not even do marketing.”
Capital – Mandarin Capital helps mid-sized companies to finance a fast growth. Thanks to the capital from the Far East, the pharmaceutical company Euticals quickly took over two companies and acquired a minority stake of a third and fourth.
Contacts – The most helpful thing, in addition to money, is the good relationship of Mandarin Capital with the government of Beijing. Licenses and permits, for a factory for instance, are obtained quickly. A production plant in Suzhou was raised in 2009 for the portfolio company Gasket in express growth. Gasket Suzhou increased their sales by 450 percent over two years. Recently, the factory area was doubled to 10 000 square meters.