A Chinese investment fund set up to springboard British businesses into Asia has bought a 20pc stake in a technology company that targets advertising at smartphone users based on their location.
First Eastern Investment Group, whose previous investments in the UK include the designer handbag firm Lulu Guinness and mobile payments company Monitise, will put at least $5m (£3m) into London-based Tamoco, a business set up two years ago.
As part of the deal, First Eastern – run by Victor Chu, a well-connected Hong Kong private equity veteran –has established a 50:50 joint venture with Tamoco in China in order to establish a footing there. It marks the eighth investment in Britain by the fund, announced four years ago by David Cameron, who praised it as an indication of strengthening trade links between Britain and China.
Tamoco, which operates in the UK, US and Scandinavia, uses technology embedded in smartphones, such as Wi-Fi, near field communication, and Bluetooth, to more accurately target marketing at consumers.
Mr Chu said the deal would mean First Eastern introducing advertising groups such as WPP and Publicis to the British company, and that the Chinese market presented a major opportunity.
“In some areas Asia is more advanced [than Europe], certainly in mobile payments,” he said. “If we are able to bring their technology here, I think there’ll be a huge market out there.”
Mr Chu said that at present, Tamoco represented its smallest investment to date in the UK, but that the funding gave First Eastern a first option on further investment rounds. “Obviously we will pay a lot more if we like what we see,” he said.
The fund invested $20m in Monitise, the mobile banking company whose software is used by many of the world’s biggest financial institutions, four years ago, when shares in the company were less than half their current value. It set up a similar joint venture agreement to bring Monitise to Asia at the time, and sold out of the business last year.
Overall, First Eastern, one of China’s oldest private equity groups, has invested over £100m in Britain, and is planning further deals.
Mr Chu, the group’s chairman, first entered the public eye in the UK when it emerged that the group was part of a consortium bidding for Northern Rock shortly before the bank’s nationalisation in 2008.
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