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Chinese fund plans US$10b European deals after Philips

[HONG KONG] The Chinese investment firm buying Royal Philips NV's lighting components arm is targeting more European acquisitions as large as US$10 billion.

GSR Capital will pursue overseas deals in technology, clean energy and pharmaceuticals, as well as online finance, Chairman Sonny Wu said. The firm, which said Monday it plans to raise a US$5 billion global acquisition fund, will target Europe where valuations are more reasonable than in the US, according to Mr Wu.

"We're looking at the top one or two companies in the world in their sectors," Mr Wu said in an interview on Monday in Hong Kong. "They may not be growing fast, but they will with the China angle."

Mr Wu, a former Nortel Networks Corp executive with backing from a Hong Kong solar-power magnate, is raising a buyout fund to source larger acquisitions of technology-heavy companies with the potential to grow in China. He's seeking to add to the US$28.1 billion of cross-border deals by Chinese private-equity firms this year, up from US$10.2 billion during the same period in 2014, data compiled by Bloomberg show.

GSR, which has offices in Beijing, Hong Kong and Palo Alto, California, also runs venture and growth capital funds. The firm will be branching out into biotechnology and health care, according to Mr Wu.

"Pharmaceuticals is huge in China. Other guys are setting up hospitals, or helping restructure state-owned enterprises. We don't do that," he said. "We want to acquire pharmaceuticals companies - we're scanning the world - and bring them to China."

A GSR-backed fund is leading a group of investors that agreed in March to acquire control of the Philips Lumileds business for US$2.8 billion. The buyers have received US antitrust approval for the deal and aim to complete the purchase by October, Mr Wu said.

Mr Wu's funds, whose executives have worked at companies including Samsung Electronics Co, will partner with entrepreneurs to enter areas where GSR doesn't have its own expertise, he said.

In China, "the people who will make money have to compete globally," Mr Wu said. "We want to change the industrial landscape."

BLOOMBERG