Global private equity firm Carlyle Group has raised 3.2 billion yuan ($495 million) for its projected 5 billion yuan China fund, launched last year, the firm said in a statement.
The fund, Beijing Carlyle Investment Center LP, has become the first foreign fund to be registered with China’s National Development and Reform Commission (NDRC), the statement said, opening it to a wider pool of investors, including social security funds.
“We expect that the NDRC registration will help us to strengthen our cooperation with large enterprises and institutional investors like the social security funds,” X.D. Yang, managing director of Carlyle and co-head of Carlyle Asia Partners, said in the statement.
Carlyle said it has made its first investment from the yuan fund in the consumer retail sector, but it did not give further details.
Carlyle is among a number of foreign private equity firms raising yuan funds in the hope that local currency funds will allow them to invest more quickly in an increasingly competitive market for deals.
Blackstone Group was the first foreign firm to launch a yuan fund in 2009, and has been followed by TPG Capital, Carlyle and more recently the private equity arms of Goldman Sachs and Morgan Stanley .
But while local funds find it relatively easy to raise capital, often taking money from high net-worth individuals, the foreign firms are finding it tougher.
“There’s a limited pool of institutional investors in China, and if you are raising money from high net-worth individuals, you have to address questions over whether the capital will be there when you call it,” said one industry insider.
Investors in private equity funds typically commit an agreed amount to a fund for up to 10 years, and the money can be called for investment at any time during the investment period.
While banks and insurers are able to invest in private equity funds in China, getting official approval for these investments is also time-consuming, which adds to the difficulty for foreign firms to raise yuan funds, said the source, who was not authorised to speak to the media and asked not to be identified.