International Finance: Buyout Firms Race to Build Yuan Funds To Tap China
HONG KONG -- Foreign firms that include some of the biggest names in U.S. private equity are rushing to raise Chinese funds that offer a new route to getting deals done in the world's fastest-expanding major economy.</br></br>In the latest example, Carlyle Group LLC is in advanced discussions to raise a local-currency private-equity fund of several billion yuan, according to people familiar with the situation, after already setting up a previously undisclosed smaller yuan fund earlier this year for growth-capital investments.</br></br>Kohlberg Kravis Roberts & Co. also is actively studying setting up a yuan-denominated fund, according to people familiar with the situation.</br></br>In recent days, other foreign private-equity firms and banks, including Blackstone Group LP and Macquarie Group Ltd., have announced plans to raise a total of about $4.5 billion in funds from local investors.</br></br>The allure of the Chinese market is powerful for U.S. private-equity firms that have watched dozens of leveraged buyout deals sour over the past year amid turmoil in credit markets and a global recession. By contrast, China's economy is emerging from the global financial crisis in better shape than many had expected, expanding 7.9% in the second quarter.