The three biggest private equity firms in the United States had each had preliminary talks about selling minority stakes to the mainland's Social Security Fund, the Financial Times reported yesterday. The newspaper quoted sources as saying the talks were focused on the fund taking a stake of up to 9.9 per cent in one of the US firms but had largely stalled since summer. The three private equity firms are Carlyle Group, Kohlberg Kravis Roberts, and TPG. In May this year, the mainland's State Foreign Exchange Investment, now China Investment Corp, paid about US$200 billion for a 9.9 per cent stake in Blackstone at the time of the group's pending public share offering in New York. Blackstone hired former Hong Kong financial secretary Antony Leung Kam-chung to run its China office in Hong Kong and help it seek key deals in the mainland. The newspaper said the fall of Blackstone's share price from US$31 at its June listing to about US$25.50 now had left mainland investors leery about similar deals. Kathleen Ng, managing director of Centre for Asian Private Equity Research, said it was natural for foreign private equity groups to be interested in forming affiliations with mainland institutions. 'For private equity firms, having a Chinese institution would mean more than just being a fund source. More importantly, such associations would leads to deals in China as well as having a local partner whom they can leverage to facilitate deal consummation,' she said.