Carlyle to Form Buyout Fund With Beijing Government

Elite private investors are buying up major companies at a record pace, in a wave of deals that is raining riches on Wall Street but also may be raising the risk of a financial bust. - Private Cash Fuels Boom in Takeovers, Los Angeles Times, November 21, 2006

Bloomberg
January 12, 2010

Carlyle Group, the world’s second- largest private-equity firm, said it will set up a domestic Chinese private equity fund with the Beijing government.

The fund, to be registered in China’s capital, will be established by the Beijing Municipal Bureau of Financial Work and Carlyle Asia Partners, Carlyle said in an e-mailed statement. The yuan-denominated fund will be entitled to “preferential treatment” from the government, it said.

Carlyle follows Blackstone Group LP, which became the first global private-equity firm to set up a 5 billion yuan ($731 million) fund with the Shanghai government in August to target investments in the eastern coastal city and neighboring areas. China is stepping up efforts to build its own private equity industry as the government seeks to foster corporate governance and strengthen capital markets.

“You’ll see this trend continue with more global private equity titans seeking to raise domestic money in China with government-backed institutions,” said Alfred Lam, research associate at the Asian Venture Capital Journal. “It helps deal sourcing and capital is more readily available than in other parts of the world.”

The Carlyle Asia Partners renminbi fund will invest alongside the Asia buyout group of Carlyle, which signed a memorandum of understanding with the Beijing Municipal Bureau of Financial Work, and pursue independent investments, according to the statement.

The fund “will help expand our investment capabilities in Beijing and across China, further Carlyle’s strategy of localizing our franchise in China and contribute to the healthy development of the local private equity industry,” Daniel A. D’Aniello, founding partner and managing director of the buyout firm, said in the statement.

Washington-based Carlyle has invested more than $2.5 billion in China in more than 40 deals, according to the statement, and already operates a smaller yuan fund in China through its growth capital unit. It manages $87.6 billion of assets globally in 65 funds as of Sept. 30.

CLSA Asia-Pacific Markets and Hong Kong-based First Eastern Investment Group announced plans in August to form domestic Chinese funds in Shanghai, raising 10 billion yuan and 6 billion yuan respectively.