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Carlyle Raising $3 Billion Asia Fund

HONG KONG (Reuters) – The Carlyle Group is raising a new Asia buyout fund with a target size of up to $3 billion as the U.S. private equity giant aims to tap more deals in Asia, two fund industry sources told Reuters on Friday.

It would be Carlyle’s third Asia-dedicated buyout fund and its biggest such fund in the region.

Its last Asia buyout fund launched in July 2006 raised $1.8 billion, which has been invested in various projects across the region, including a landmark deal with China Pacific Insurance (Group) Co Ltd (601601.SS), China’s No. 3 life insurer.

Carlyle is readying funds to invest as Asia, led by China, is expected to be the first to recover from the global economic slowdown.

The Washington D.C.-based firm has been in talks with some potential institutional investors, known as “limited partners” of a private equity fund, for a few months, and the target size of the fund could be between $2.5 billion and $3 billion, said the sources.

The fund will focus on Greater China and Southeast Asia, where Carlyle has already been expanding aggressively in the past few years, said the sources.

The sources are institutional investors who have been briefed on Carlyle’s plan and declined to be identified because the fund-raising process is private. Carlyle declined to comment.

TRACK RECORD

Carlyle became China Pacific’s first foreign investor in late 2005 and now holds around 17 percent of the Chinese insurer.

China Pacific, already listed in Shanghai, is planning a $3.5 billion listing in Hong Kong late this year, which would open a channel for Carlyle to sell part of its holdings to make it a showcase for its investment success in Asia. 

“It’s all about track record and I think it’s perfect timing for Carlyle to raise a new buyout fund as the China Pacific (Hong Kong) IPO has already attracted a lot of eyeballs,” one source said.

In June, Carlyle said it raised $1.04 billion for its fourth Asia growth capital fund with investment focuses on China, India, South Korea and other Asian emerging markets. 

Carlyle’s growth funds usually target private enterprises with big market potential, while its buyout funds focus more on big industry leaders and deal size is often worth several hundred million dollar or even over $1 billion sometimes.

Early this year, Carlyle raised a new $13.7 billion U.S. buyout fund despite a poor market environment in the worst financial crisis since the Great Depression.

Carlyle has been also investing in properties across Asia through its regional real estate funds for years.

Usually, it takes about a year for a private equity fund to complete raising a new fund. For instance, Carlyle spent 14 months raising its new Asia growth fund.

In Asia, Carlyle competes with other U.S. buyout giants such as Kohlberg Kravis Roberts & Co. and Blackstone Group (BX.N) for deals.

By George Chen
(Editing by Muralikumar Anantharaman)