Nomura enters China’s PE space
Nomura Holdings has become the first Japanese financial services company to invest in Chinese private equity, after agreeing to participate as an LP in the Shanghai-based Jiu You Quan Xing Equity Investment Fund. The vehicle, which is managed by Jiu You Equity Investment Management, invests in companies in the high tech and biopharmaceutical spaces.
This arrangement follows the Shanghai municipal government's decision to allow Nomura and Jiu You Quan Xing to join the qualified foreign limited partner (QFLP) program. Nomura - the first foreign investment bank to enter the Chinese mainland back in 1982 - will now be able to convert foreign capital from its own reserves or from third-party investors and commit it to the local currency fund.
The QFLP pilot program made Shanghai the first city to allow overseas investors to invest in China using foreign currency.
The Blackstone Group, The Carlyle Group and DT Capital were among the first participants in the Shanghai scheme in May of last year, closely followed by First Eastern Investment Group, SB China Venture Capital, and Shanghai Guosheng CLSA Venture Capital. The city's has so far allocated a QFLP quota of $1.5 billion. It is understood that Carlyle and Blackstone were each granted $100 million.
A seventh approved fund, Hony Capital, made the first investment under the Shanghai program by injecting capital into gloves manufacturer Shijiazhuang Hongray Group last September.
QFLP now operates in Beijing and Chongqing as well. Israeli-China focused private equity firm Infinity Group won approval from the Chongqing authorities in May while J.P. Morgan Asset Management received the go-ahead in Beijing. The latter plans to launch a $1 billion fund renminbi fund, which would make it the largest ever foreign manager of a local currency vehicle.
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