Carlyle to form renminbi fund with Fosun

Private equity firm The Carlyle Group announced its second renminbi fund in two months, this time a $100 million fund in partnership with China's Fosun group. An agreement between the two parties was signed yesterday.

Hong Kong- and Shanghai-based Fosun group was started in 1992 and has grown into the largest privately owned conglomerate in China. The holding company of the group, Fosun International, is listed on the Hong Kong Stock Exchange. The group currently has businesses spanning pharmaceuticals, property development, steel, mining, retail, services and also takes strategic stakes in companies.

The renminbi fund announced yesterday will have an initial capitalisation of $100 million contributed by Fosun and Carlyle. Carlyle will make its contribution from the Carlyle Asia Growth Fund. The initial capital will enable the partners to immediately pursue investment opportunities, however the partners also intend to raise capital from local Chinese investors for subsequent Rmb funds and will also identify co-investment opportunities.

Carlyle and Fosun will co-manage the fund, said a Carlyle spokesperson. From Carlyle Wayne Tsou who heads Carlyle Asia Growth Partners will be the person in charge. The plan is to manage the fund using existing Carlyle and Fosun staff, however Carlyle has not ruled out hiring people in the future, the spokesperson added.

Last month Carlyle signed a memorandum of understanding with the Beijing Municipal Bureau of Financial Work to create an Rmb fund, registered in Beijing. Carlyle did not announce a target size for the fund, but it is expected to be of a similar size to funds launched by players like Blackstone and First Eastern. Carlyle said yesterday the Beijing fund will focus on larger investments and invest alongside Carlyle Asia Partners.

Fosun currently manages a number of funds for Chinese investors. This is the second time Carlyle and Fosun have forged a partnership to co-invest. In September 2009, Carlyle and Fosun jointly invested in Guangdong Yashili Group, which makes infant formula in China.

"China is one of the best places in the world to invest," said David Rubenstein, Carlyle co-founder in a written statement announcing the new Rmb fund. "By working with local partners like Fosun, we expect to make investments that benefit high-growth companies and enhance the local private equity industry."

To date, Carlyle has invested more than $2.5 billion in China in more than 40 deals.