D.E. Shaw and Company, one of the world's largest hedge funds, is teaming up with its local partner to launch the first yuan-denominated private equity fund for the legendary Wall Street firm.
That signals international capital inflows into China are continuing despite growing concerns about the country's economic outlook.
According to people familiar with the matter, D.E. Shaw is working with Hong Kong-based Ascendent Capital to launch the yuan-denominated fund, which aims to initially raise about 500 million yuan (HK$616 million). Ascendent Capital is a China-dedicated investment firm founded by Liang Meng, a former D.E. Shaw partner, and Kevin Zhang, a former Goldman Sachs partner.
Meng was also D.E. Shaw's chief executive for Greater China.
Last year, Meng left D.E. Shaw to join Zhang, his Yale business school alumnus, to set up Ascendent.
New York-based D.E. Shaw and Ascendent have won support from the Shanghai city government for the proposed fund and will jointly set up a new firm called Shangda Capital to manage the fund, people with knowledge of the matter say.
The fund will be registered in the Pudong New Area, Shanghai's financial district. 'D.E. Shaw has done some good deals in China in the last five years and made some good returns, so it's natural for it to show a stronger commitment to China by launching a local fund,' said one of the people.