China’s Jiuding to launch mezzanine fund

The fund is currently finalizing terms and further details will be diclosed within a week, a Jiuding spokesperson told AVCJ.

Local media reported that the GP is targeting RMB10 billion ($1.63 billion), with a first close of RMB1 billion. Qingshan Kang, a partner at Jiuding, told the 21st Century Business Herald that the firm will subscribe to bonds issued by target companies and also engage in direct lending.

Hurt by uncertainty in the Chinese IPO market, 46 renminbi funds attracted just $8.9 billion in commitments in the first seven months of 2013. PE firms see mezzanine funds, which generate more consistent yields from interest payments, as a new opportunity to attract investors.

Offshore PE funds are also taking more notice, driven by the fact that demand for capital among small- to medium-sized enterprises (SMEs) is strong in China. According to Adamas Asset Management, SMEs on rely on banks for just 4% of their financing needs - a world away from 80% in Europe and 30% in the US.

"This is massive driver for why SMEs in China are in need of credit," Barry Lau, managing partner with Adamas in Hong Kong, told AVCJ in a previous interview. "We believe there are around 50 million SMEs in China which contribute more than 65% of the country's GDP and are responsible for more than 80% of employment."

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• Topics
• Greater China
• Fundraising
• Mezzanine
• Renminbi fund
• China
• Fundraising
• Renminbi
• Structured finance