Private Equity Eyes the East

With the announcement that the Carlyle Group, the Washington, D.C. based
private equity firm with strong ties to the Bush's, Saud's and the global
power-elite, announce its plans for a new yuan-denominated fund, everybody
took note. Foreign PE wants a slice and and sees yuan-denominated funds as
a way to gain competitive advantage in the Chinese markets which heavily
regulate foreign capital. Some view yuan-denominated fund raising as a
silver-bullet solution to both the myriad of regulations that govern the
use of foreign capital as well as the desire to gain exposure to the
break-neck pace of growth in the Chinese economy which grew 8.7% last year.

Carlyle isn't the only one who wants a piece of the pie, Kohlberg Kravis
Roberts & Co (KKR) and Texas Pacific Group (TPG) announced yesterday that
they are in talks to jointly acquire China International Capital
Corporation (CICC) from Morgan Stanley. Whether or not they will
successful against the heavily favored by regulation and well-connected
local competition remains to be seen. However, one thing is for sure,
there is no shortage in demand for gaining access to the Chinese economy,
which has continued to rapidly develop while the developed word has
stagnated in the aftermath of the financial crisis.

Authored by Stephen Balaban