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Carlyle Partners for China Strategy

The Carlyle Group, a US-based private equity firm, has designated Shangdong Province as one of its key investment areas in China.

The Department of Foreign Trade and Economic Cooperation of Shangdong Province (SDFTEC) and Carlyle entered into a memorandum of understanding to enhance trade co-operation and stimulate investment in the province.

This will involve Carlyle putting resources and capital into the region in return for the SDFTEC recommending opportunities for strategic co-operation and investment.

The agreement will prove a boost to Carlyle's strategy in China following a difficult few years in which it has only made two investments, one of which involved a high profile change of tack.

Carlyle's attempt to acquire an 85% stake in construction machinery business Xugong in 2006 faced strong opposition at both local government level and in the media, forcing Carlyle to accept a reduced 45% minority stake after more than a year of negotiations. The following year, Carlyle invested US$27.5m in wood flooring manufacturer A&W (Shanghai) Woods.

Shangdong Province ranks second among Chinese provinces in terms of population and gross domestic product, which has grown at an average annual rate of 14.3% over the past five years.

Source: Thomson Merger News