When private equity was enjoying its "Golden Age" over the last two years, the
outsized returns whetted the appetite of the managers controlling China's vast
reserves of dollars to get in on the action for a better return. The highest
profile investor was China Investment Corp., which
spent
$3 billion for a 10% minority stake in the Blackstone Group LP just before the
New York firm's IPO.
Now the the Financial Times is
reporting
that China's Social Security Fund, with over $61 billion under management,
held talks this summer to buy stakes in three top private equity firms:
Kohlberg Kravis Roberts & Co., the Carlyle Group and TPG. The Social
Security Fund had hoped to take a stake of up to 9.9% in any one of the buyout
shops. However, the lackluster performance of Blackstone following the IPO, as
well as the credit crunch putting the squeeze on the leverage powering all the
dealmaking, left the Chinese fund with cold feet about taking direct stakes.
Nevertheless, the Chinese appetite for American financial services companies
is unlikely to have been satisfied just yet. Last week Wall Street firm Bear
Stearns Cos. and Chinese investment bank Citic Securities Co. said each was
taking a $1 billion stake in the other in a
deal
that opens the door for business partnerships in both the U.S. and in Asia. —
George White
See
the FT story
See
The Deal's Oct. 23 story on Bear Stearns
See
The Deal's July 3 special report on Blackstone
