(Bloomberg) -- RRJ Capital, founded by former Goldman Sachs Group Inc. banker Richard Ong, will fully subscribe to the $150 million convertible bonds issued by Luye Pharma Group Ltd., marking its first investment in China in five years.
The Asia private equity firm, which oversees $16 billion in assets, had halted its investments in China since 2019, when the country’s strict Covid-19 policies led to widespread lockdowns, severely disrupting industrial production, consumer spending and the broader economy. During this period, RRJ shifted its focus to opportunities in Southeast Asia, the US and India.
RRJ’s latest move comes as investor sentiment toward the world’s No. 2 economy has brightened after Beijing unleashed a range of stimulus measures in late September. The investment in Luye Pharma signals a renewed confidence in select Chinese companies, with valuations now at their lowest levels, presenting attractive opportunities, Ong said in an interview.
“We are very selective on China and also getting more long-term positive on the country. We think recent stimulus is just beginning,” said Ong who is also RRJ’s chairman and CEO. “We think the Chinese government is serious in fixing the economy.”
China’s string of measures to help its slowing $18 trillion economy includes interest rate cuts, steps to support the stock and property markets, pledges to reduce local debt risks and a plan to recapitalize big state-owned banks. The stimulus blitz spurred a rally in Chinese stocks, making it one of the world’s best performers last month.
The announcements led a number of economists to upgrade their forecasts for the country’s growth this year to a pace closer to the official target of around 5%.
Luye’s convertible bonds will be due in 2025 with a 5.85% coupon. UBS Group AG is the sole financial advisor to the deal.
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