Carlyle partners Fosun on $100m RMB fund

The tie-up with China's largest private investment house furthers Carlyle's aggressive expansion into the country, where the firm has so far invested more than $2.5bn.

The Carlyle Group is continuing its push into Asia by forming a strategic relationship with Fosun Group, China’s largest privately held investment conglomerate.

Carlyle and Fosun will jointly sponsor and manage a Shanghai-domiciled RMB fund for investment in high growth businesses in China. Carlyle’s Asia Growth Fund and Fosun will each commit $50 million to the fund, which will be able to invest immediately.

With $100 million from its sponsors, the fund will invest in a broad range of sectors, mirroring the strategies of Carlyle’s Asia Growth Capital Group, which typically invests between $20 million and $50 million per deal, a Carlyle spokeswoman said. 

The two firms intend to target domestic China investors for subsequent RMB vehicles, the statement said. The pair will look to raise capital from local Chinese investors, identify co-investment opportunities with a business nexus in China, as well as leverage each other’s resources and networks, according to a Carlyle statement.

“Any past, present and future Carlyle fund will be able to invest via this partnership,” Wayne Tsou, a Carlyle managing director and head of Carlyle Asia Growth Partners, told sister news site PEI Asia.

Any past, present and future Carlyle fund will be able to invest via this partnership.

Wayne Tsou

“The strategic relationship between Carlyle and Fosun is complementary and mutually beneficial. It will help expand our global investment capabilities and further our strategy of localising our business in China,” Tsou said in the statement. The two firms said they will also share “best practices and resources to better tap the growth potential presented by China”.

Carlyle and Fosun are no strangers to each other, having invested together in Guangdong Yashili, a Chinese infant formula maker, in September 2009. That investment, the value of which was not disclosed, saw Carlyle take a 17.3 percent stake in the company.

The tie-up with Fosun marks another chapter in Carlyle's seeming unstoppable expansion into China, where the firm has so far invested more than $2.5 billion across more than 40 deals.

In January 2010, Carlyle signed a memorandum of understanding with the Beijing Municipal Bureau of Financial Work to set up an RMB fund in Beijing. That fund will also raise capital from domestic LPs and is reportedly looking to raise RMB5 billion. It will have an average investment size of $75 million and will be managed by Carlyle Asia Partners, the firm’s buyout team, a Carlyle spokeswoman said at the time.

Carlyle’s Asian growth group manages approximately $2 billion across four funds. It is currently investing out of Carlyle Asia Growth Partners IV (CAGP IV), which closed on $1.04 billion in June 2009. Thus far, CAGP IV has made four investments in China: Ellassay, a women’s fashion house; Nantong Rainbow Heavy Industry, a ship components supplier; iTour, a tourism services provider; and China Agritech, a fertilizer company.

Set up in 1992 and based in Shanghai, Fosun Group currently manages a number of funds for Chinese investors although details on these funds were unavailable. The company has interests in sectors including pharmaceuticals, property development, steel, mining, retail and services, and manages more than $10 billion in assets.