Investment

TPG Capital comes out with yuan fund

By Wang Ying (China Daily)
Updated: 2010-08-24 14:40

SHANGHAI - A 5-billion-yuan ($735.35 million) RMB-denominated fund was co-established in Shanghai by world leading

private investment company TPG Capital Ltd and the Shanghai Municipal Government and the Pudong New Area Government on Monday. The fund will invest in China's consumer, retail, financial and healthcare industries and focus on medium- to large-sized companies nationwide, sources said.

James Coulter, founding partner of TPG Capital (formerly known as Texas Pacific Group), told China Daily that fundraising would start in the next few months.

TPG Capital's yuan-denominated private equity (PE) fund is far from being the first in China. Last August, Blackstone Group set up a 5 billion yuan fund with the Shanghai government, targeting investments in the eastern coastal city and neighboring areas.

Carlyle Group, the world's second-largest private-equity firm, received approval this March to form a $100 million fund with the Shanghai Fosun High Technology (Group) Co Ltd, a privately-owned company with businesses spanning steel, mining and real estate.

TPG Capital invested in Shenzhen Development Co in 1994 and its portfolio includes Lenovo Group Ltd, China's biggest personal computer maker, and Daphne International Holding Ltd, a shoe retailer.

China is entering into a new phase of investment development, said Coulter. "It started with us investing in Lenovo's global business (now) our theme is growth in Chinese consumption. I think going forward that will continue to be a strong theme for us. It is another aspect driving our localization," he said.

TPG Capital currently has 40 staff members focused on Chinese investments, and the company is targeting the development of central and western China. "Given our role with Daphne and Lenovo, we have seen the growth of consumer products in these regions," Coulter said.

TPG Capital's long-term strategy will focus on central China and the coastal areas. Energy efficiency, new energy sources and renewable energy are sectors with great potential for development in the future, said Sing Wang, co-chairman of TPG Greater China and head of TPG Growth North Asia.

China has become TPG Capital's second-largest investment market outside the US, accounting for 10 percent of the US-based company's total investments and more than 10 percent of its global profits, said Coulter.

"The experience of aiding Lenovo in acquiring IBM's personal computer business shows a trend that there will be more Chinese companies playing a more active role in investing overseas in the future," said Wang.

The setting up of a RMB-denominated private equity fund comes as Shanghai gears up to develop into an international financial hub by 2020. The Lujiazui Financial Center, located in Pudong New Area, will be at the geographic heart of the city's financial development.

The launch of TPG Capital's onshore investment platform in Pudong New Area will facilitate Pudong's efforts to create added value for enterprises in Shanghai, the Yangtze River Delta and across the nation.

Foreign direct investment in China rose for a 12th straight month in July. Investment rose 29.2 percent to $6.92 billion last month, according to the Ministry of Commerce.

China Daily