It used to be that foreign private equity funds, especially from the U.S., would make investments in China by taking minority stakes or forming joint ventures. But now some of those same PE firms have reversed their strategy.
Executive director of the Beijing Private Equity Association Victor Gao says he sees more foreign PE firms coming to China to extract capital and raise funds in the country and possibly invest outside its borders. Gao says they do their fundraising in two ways:
- Raise dollar funds from local Chinese investors because "China sits on a pile of $2 trillion foreign currency, and they lack the talents. They need people to help to manage the money."
- Set up their presence to raise permanent private equity funds.
"This [fundraising in China by foreign PE firms] was unheard several years ago ... and this will be a very important situation," Gao said at the symposium, The Financial Crisis: The Impact on Private Equity in Emerging Markets, at the Asia Society in New York City Monday evening. - Gerald Magpily
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