Paulson exits scandal-hit firm as concern mounts about China forestry plays

In a statement released by the hedge fund, John Paulson cited uncertainty over Sino Forest's public disclosures and financial statements, which are currently the subject of an independent investigation. Paulson was said to have owned nearly 35 million shares in the company as of April 29. This suggests a paper loss of more than $500 million for the hedge fund.

Toronto-listed Sino Forest has been on the defensive since late May when a short-seller accused the company of overstating its assets and defrauding investors by routing funds off the books through a web of intermediaries. Sino Forest denies the allegations but its stock has plunged 80% since the claims became public.

Carlyle currently holds approximately 11% of Beijing-based China Forestry, having first invested in the firm three years ago through its Carlyle Asia Growth Partners III fund. Partners Group's stake is around 5.5%.

China's forestry sector has undergone considerable regulation in the last decade, with assets transferring from local governments to private entrepreneurs, the Financial Times reported. These transactions were often opaque, creating uncertainty as to who owns what.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Industrials
• Exits
• Greater China
• The Carlyle Group
• Partners Group
• Paulson & Co