Rush to tap PE market

11:02, December 06, 2010      

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Morgan Stanley has joined global buyout firms such as Blackstone Group and Carlyle Group in a rush to tap China's booming private equity market, partnering with the eastern city of Hangzhou to launch yuan-denominated funds. Morgan Stanley has signed a partnership agreement with the local government and has decided to establish its China headquarters for private equity investment in the city, the Hangzhou government said on its website.

Morgan Stanley and its partner aim to raise 1.5 billion yuan ($225 million) in the initial phase, a source with direct knowledge of the plan told Reuters. It will invest in non-public companies. Earlier this week, Chinesemedia reported that US private equity giants Warburg Pincus and Kohlberg Kravis Roberts &Co planned to set up units in Shanghai to launch yuan funds, following in the footsteps of rivals Blackstone, Carlyle and Bain Capital.

China is encouraging the development of the private equity industry, hoping to channel more liquidity into the private sector to aid economic growth. Beijing also expects to use foreign expertise to improve corporate governance.

"We hope that the partnership with Morgan Stanley would help boost private sector investment, accelerate economic restructuring and boost the local private equity industry," the Hangzhou city government said in a statement.

A Morgan Stanley spokesman confirmed the partnership but declined to comment on the size of the fund.

Source: Global Times

(Editor:黄蓓蓓)

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