SAIF Partners Raises New Fund

HONG KONG/SHANGHAI (Reuters) – SAIF Partners, backed by Japan’s Softbank (9984.T: Quote, Profile, Research, Stock Buzz), has completed raising 1.6 billion yuan for its first yuan-denominated private equity fund, sources with direct knowledge of the matter said on Wednesday.

Major investors of the fund include Chinese private enterprises and some top-end domestic individual investors, said the sources, who declined to be identified before an official announcement is made as early as next month.

“Despite the tough market environment, there is still demand for investments in such yuan funds from rich Chinese entrepreneurs,” said one of the sources.

SAIF declined to comment.

China has at times been at odds with global private equity firms, thwarting moves by foreign investors that have vied for stakes in industries deemed to be strategically sensitive.

But Beijing has pledged this year to develop private equity funds, especially yuan-denominated funds run by domestic managers, to reduce companies’ dependence on bank financing amid the global credit crunch.

To encourage growth in domestic private equity sectors, Chinese securities regulators also granted approval to about a dozen Chinese brokerages to set up their own private equity businesses this year.

Among them, the newly established private equity arm of CITIC Securities (600030.SS: Quote, Profile, Research, Stock Buzz), China’s top brokerage, aims to raise 6 billion yuan for its first yuan-denominated fund.

Global private equity and venture capital firms are also planning to team up with their Chinese partners to set up yuan-denominated funds, which could let foreign investors secure approvals for deals more easily due partly to not needing the conversion and supervision of foreign exchange issues.

For example, U.S. venture capital giant Sequoia Capital also raised about 1 billion yuan earlier this year for its first yuan-denominated fund focusing on China deals, according to Chinese media reports.

SAIF Partners is one of the most high-profile and earliest of private capital firms in China. It manages more than $2 billion of several U.S. dollar funds, according to industry data service Zero2IPO.

For its U.S. dollar funds, internet and telecoms group Softbank is not the only foreign investor. Investment bank JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz), Princeton University and Hong Kong tycoon Li Ka-shing are also on the lists of its limited partners.

Its U.S. dollar-denominated funds invest across Asia including China, South Korea, India, Hong Kong and Taiwan, but its first yuan-denominated fund will only target China deals, the sources said.

(Reporting by George Chen in HONG KONG and Helen Ding in SHANGHAI; Editing by Jacqueline Wong)