Carlyle, Fosun combine with yuan-backed fund power play
By Winny Wang |
February 25, 2010, Thursday
|
Print Edition
Print Edition
GLOBAL private equity giant Carlyle Group will set up ayuan-backed fund with China's largest private conglomerate, Fosun Group, to tap into robust growth opportunities and pursue preferential policies in the country.
The US$100-million private equity facility will become the first foreign-invested fund registered in Shanghai after China simplifies registration procedures for overseas investors to form local joint ventures in March.
It marks a major step for Shanghai to forge a private equity investment platform on its way to becoming a global financial hub by 2020.
"Shanghai has been working out support regulations for the central government's new rules to further encourage foreign private equity firms to invest in the city," Shanghai Vice Mayor Tu Guangshao said yesterday at a ceremony where the two firms signed a memo of understanding.
Foreign companies will no longer need to be reviewed by the Ministry of Commerce when they decide to form joint ventures in non-restricted industries in China, according to the new rules.
They can directly apply to local business-registration authorities, which will review their investment plans and grant approval if all criteria are met.
"Four other global private equity giants, which have already set up general partnership companies in Shanghai, have inquired about the new rules," said Xiang Yeping, deputy director of the Foreign Investment Enterprise Registration Division under the Shanghai Administrative Bureau for Industry & Commerce.
Patrick Zhong, managing director of Fosun, said the deal had the support of the city and he believed it would benefit from future preferential government policies.
Shanghai has issued a series of preferential policies such as tax breaks, subsidies and cash incentives to boost the private equity industry, especially in the Pudong New Area where it has provided benefits of up to 15 million yuan for PE investors who set up funds or management firms in the district.
"Shanghai has outpaced other Chinese cities in attracting foreign private equity firms, but it should grant more tax-preferential policies and cash incentives to maintain its development momentum," Zero2IPO Research Center said in a report.
The 50-50 new fund will focus on investments in expanding companies in China by using the two firms' acumen in identifying growth opportunities and Fosun's extensive connections in China.
The two firms plan to set up more funds, both in yuan and in foreign currencies and to expand overseas.
"We will set up offices in overseas cities such as New York, London and Tokyo to form international investment groups," said Guo Guangchang, Fosun's chairman.
Fosun's investments have thus far focused on pharmaceuticals, property development, steel, mining, retail and services and it has managed assets exceeding US$10 billion.
The United States-based Carlyle has invested in more than 40 projects in China worth more than US$2.5 billion.
In January Carlyle established a yuan-denominated fund with the Beijing government to invest in larger growth companies in China.
The US$100-million private equity facility will become the first foreign-invested fund registered in Shanghai after China simplifies registration procedures for overseas investors to form local joint ventures in March.
It marks a major step for Shanghai to forge a private equity investment platform on its way to becoming a global financial hub by 2020.
"Shanghai has been working out support regulations for the central government's new rules to further encourage foreign private equity firms to invest in the city," Shanghai Vice Mayor Tu Guangshao said yesterday at a ceremony where the two firms signed a memo of understanding.
Foreign companies will no longer need to be reviewed by the Ministry of Commerce when they decide to form joint ventures in non-restricted industries in China, according to the new rules.
They can directly apply to local business-registration authorities, which will review their investment plans and grant approval if all criteria are met.
"Four other global private equity giants, which have already set up general partnership companies in Shanghai, have inquired about the new rules," said Xiang Yeping, deputy director of the Foreign Investment Enterprise Registration Division under the Shanghai Administrative Bureau for Industry & Commerce.
Patrick Zhong, managing director of Fosun, said the deal had the support of the city and he believed it would benefit from future preferential government policies.
Shanghai has issued a series of preferential policies such as tax breaks, subsidies and cash incentives to boost the private equity industry, especially in the Pudong New Area where it has provided benefits of up to 15 million yuan for PE investors who set up funds or management firms in the district.
"Shanghai has outpaced other Chinese cities in attracting foreign private equity firms, but it should grant more tax-preferential policies and cash incentives to maintain its development momentum," Zero2IPO Research Center said in a report.
The 50-50 new fund will focus on investments in expanding companies in China by using the two firms' acumen in identifying growth opportunities and Fosun's extensive connections in China.
The two firms plan to set up more funds, both in yuan and in foreign currencies and to expand overseas.
"We will set up offices in overseas cities such as New York, London and Tokyo to form international investment groups," said Guo Guangchang, Fosun's chairman.
Fosun's investments have thus far focused on pharmaceuticals, property development, steel, mining, retail and services and it has managed assets exceeding US$10 billion.
The United States-based Carlyle has invested in more than 40 projects in China worth more than US$2.5 billion.
In January Carlyle established a yuan-denominated fund with the Beijing government to invest in larger growth companies in China.
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