TPG reaches first close of its two RMB funds
TPG Capital has reached a first close of its two China funds, having received commitments of RMB4 billion ($635 million). The private equity firm said that 90% of the capital raised came from private investors rather than government-linked entities. It wants private capital to account for 50% of total commitments to the funds.
Both funds launched in August 2010 and are joint venture partnerships with local governments. The TPG Shanghai RMB Fund is backed by the Shanghai municipal government and Pudong New Area government and will invest in mid- to large-size companies, principally in the financial services, consumer, retail and healthcare industries.
TPG Western China Growth Partners I, meanwhile, is supported by the Chongqing municipal financial services office and Chongqing Liangjiang New Area Development & Investment Group. It will target investments that contribute to the development of Liangjiang as a financial services center.
Sing Wang, TPG partner and Greater China co-chairman, said: "The successful first closing of the TPG RMB funds marks another milestone in TPG's development in China. I'm particularly pleased that 90% of the funds raised has come from private capital."
The Blackstone Group and The Carlyle Group have also entered into partnerships with local governments to create renminbi funds. Industry participants say fundraising hasn't been easy due to competition from ambitious local players.
Shanghai Blackstone Equity Investment Partnership, which launched in August 2009, reached a first close in April 2011, having received commitments from Chinese government entities, state-owned enterprises, and large domestic corporations. The National Council for Social Security Fund (NSSF), China's state pension fund, Shanghai Jinfeng Investment, Shanghai Ace and Shanghai Lujiazui Financial Development, are reportedly among the LPs.
Michael Sotirhos, a senior managing director at the buyout firm, said in September 2011 that the fund had raised half the RMB5 billion targeted.
Carlyle announced a first close of RMB2.4 billion ($350 million) for the RMB5 billion Carlyle Beijing RMB Fund in July 2010. Investors included Beijing State-owned Capital Operation and Management Center (BSCOMC), and Beijing Equity Investment Development Fund, as well as other large state-owned enterprises, private companies and individuals.
Goldman Sachs and Morgan Stanley also reportedly have renminbi funds in the pipeline.
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