Fast US$1b raised for China P.E. fund

PUBLISHED : Thursday, 26 July, 2012, 12:00am
UPDATED : Thursday, 26 July, 2012, 12:00am


The worsening debt crisis in the euro zone and slow economic recovery in the United States have encouraged global investors to pour more money into Asia, particularly via private equity funds.

Frank Tang, a former senior executive for Singapore's sovereign wealth fund Temasek and Wall Street bank Goldman Sachs, spent just two weeks raising more than US$1 billion for his new private equity fund dedicated to investments in China.

Industry sources said Tang, chief executive for Hong Kong-based FountainVest Partners, aimed to raise about US$1.3 billion for the firm's second private equity fund. Earlier this week, FountainVest had already raised more than US$1 billion by the first-closing date of fund-raising, they said.

'It's pretty amazing,' one of the sources said. 'When the rest of the world is struggling to survive [in terms of economic and market performance], Asia, in particular China, can still attract a lot of money easily.'

FountainVest launched its first fund of around US$1 billion in late 2008 at the height of the global financial crisis when the legendary US bank Lehman Brothers declared bankruptcy. Shanghai-born Tang, a co-founder of FountainVest, was a senior managing director at Temasek. He was a key executive responsible for the Singaporean investment agency striking landmark deals in China, including stakes in China Minsheng Banking Corp, the mainland's sixth-largest bank by assets.

Tang, who sources said was in the US this week for a roadshow, declined to comment on fund-raising-related matters. In 2009, FountainVest teamed up with other funds for an investment in, China's No 1 portal, which runs the popular Twitter-like social media service called Sina Weibo.

Major founding investors, also known as limited partners (LPs) in a private equity fund, for the first fund include Temasek, Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan. The three firms continued to invest in FountainVest's second fund, sources said.

New investors for FountainVest's second fund include the Washington State Investment Board and other local pension funds in the US, according to the sources.

Global stock markets from New York to Hong Kong have been badly hit by the snowballing debt crisis in the euro zone in the past few weeks. Investors were increasingly concerned about the risk that Greece may be forced to quit the currency union and Spain may also exit.

Asset managers, in particular for pension funds, who seek stable returns for the long term, are keen to diversify their investments, rather than rely too much on American and European government bonds. Despite worries about an economic slowdown in China, many investors expect Beijing to offer some policy supports soon to keep its annual economic growth running beyond 7.5 per cent a year at least.

FountainVest is not alone in the fund-raising market. Sources said Bain Capital was preparing to launch its new US$2.5 billion Asia-dedicated private equity fund.