DBS Raises $100 Million China PE fund

SINGAPORE (Reuters) – DBS Group’s (DBSM.SI) private equity arm said on Thursday it set up a $100 million fund in China to invest in unlisted companies there.

“The initiative reinforces DBS’ commitment to expand its franchise in the country, and underscores the bank’s conviction in the strength and potential of the Chinese economy,” the Singapore bank said in a statement.

Melvin Teo, managing director and head of DBS Private Equity, told reporters the fund will take minority stakes in mid- to late-stage growth companies with plans to list on China’s domestic A-share market.

“We find the opportunities have increased as companies look to shore up their capital in the current environment,” he said.

Teo said DBS Private Equity has to date invested around S$500 million ($327 million) across Asia, generating an internal rate of return (IRR) of around 30 percent.

In the case of DBS’ previous private equity investments in China, the IRR had been in line with the industry norm of over 100 percent, he said, adding future returns on the mainland will likely be lower because of increased competition.

(Reporting by Kevin Lim)