Carlyle, Fosun To Launch PE Fund in China

HONG KONG/SHANGHAI (Reuters) – U.S. buyout giant Carlyle Group will team up with China’s largest non-state-owned conglomerate Fosun Group to launch a $100 million yuan-denominated private equity fund, part of a global strategic alliance to share resources, the companies said on Wednesday.

Carlyle and Fosun, a unit of Fosun International Ltd (0656.HK), have initially committed $50 million each to form and jointly manage the co-branded fund which will invest in China’s high-growth companies, and will also seek to raise capital from both international and domestic investors for subsequent funds, the companies told a news conference in Shanghai.

The fund is expected to get regulatory approval soon, they said.

“China is one of the best places in the world to invest,” Carlyle Co-founder and Managing Director David Rubenstein said. “Fosun has an excellent track record in capturing China’s growth opportunities.”

Global buyout firms such as Carlyle and the Blackstone Group (BX.N) are seeking partnerships in order to launch local yuan-denominated funds in the hope of carrying out deals more quickly and easily in China, where approval for major foreign investments is difficult to obtain.

Carlyle also plans to launch a China-dedicated, yuan-denominated private equity fund in Beijing, the firm announced in January, which will invest alongside Carlyle Asia Partners and focus on larger investments. [ID:nTOE60B046]

Partnering with Carlyle is part of Fosun’s international expansion strategy, said Fosun Chairman and founder Guo Guangcheng, China’s 20th richest person in 2009 according to Forbes.

“In the past, we mainly managed our own money. In the future, we will manage more of other people’s money,” Guo told Reuters. “Previously, we focused on China. In the future, we will boost our global influence.”


Carlyle, which manages $87.6 billion in 65 funds globally, has invested more than $2.5 billion in China in more than 40 deals.

“China is the area that most of our investors are interested in or focused on,” Rubenstein said. “We do invest outside of China of course, as well, but China will get a predominant share of the money that we have for Asia because it’s so much larger and it’s such an exciting place to invest.”

Carlyle will set up a 50-50 joint venture with Fosun to manage the planned yuan fund, with Carlyle’s share of the initial investment coming from its Asia Growth Fund.

This is the second time for Carlyle and Fosun to join hands to pursue investment opportunities. In September 2009, Carlyle and Fosun jointly invested in Guangdong Yashili Group Co Ltd, one of China’s largest infant formula companies.

Fosun, founded in 1992 by four graduates of Shanghai’s Fudan University with initial capital of $4,000, has grown into a $4.7 billion steel-to-pharmaceuticals conglomerate with investments in more than 100 companies such as Sinopharm Group (1099.HK) and outdoor advertiser Focus Media Holding (FMCN.O).

Other global private equity firms are also rushing to raise money in China after restrictions were eased last year.

Blackstone announced last August that it would launch a 5 billion yuan ($733 million) fund in Shanghai, while Prax Capital, CLSA and First Eastern have also unveiled fundraising plans.

By Samuel Shen and George Chen