Carlyle Closes New $1B Asian Fund
PE firm launched marketing efforts for the new fund 14 months ago, securing 40% of its capital from new investors.
June 30, 2009
The Carlyle Group said Tuesday it has completed fundraising for its fourth Asian growth capital fund at $1.04 billion.
Carlyle, a Washington-based private equity firm with a history of investing in emerging markets, launched marketing efforts for the Carlyle Asia Growth Partners IV fund 14 months ago. Although investors in the limited partnership were not disclosed, Carlyle secured a $150 million commitment from the California Public Employees' Retirement System, which also put $75 million in the firm's third Asian growth capital fund raised in 2005, according to the state pension plan's Web site.
Wayne Tsou, managing director and head of Carlyle Asia Growth Partners, said the new investment vehicle will invest in deals that don't involve "leverage, providing attractive risk-adjusted returns."
Last month, for instance, Carlyle did just that when it invested $20 million from the new fund in chic Chinese fashion retailer Ellassay, which operates more than 280 stores across China.
Carlyle's other portfolio companies in China include China Forestry Holdings Group, China Pacific Insurance (Group) Co. Ltd., China Real Estate Network and Chongqing Polycomp International Corp., among others.
The new growth capital fund comes at a time when small and middle-market businesses in China are drawing strong interest from investors. China's economic engine, of course, has sputtered over the last year because of the global economic crunch. It is expected to generate a 6.5% GDP growth rate in 2009, though next year is projected to be higher at 7.5%, according to the International Monetary Fund.
Carlyle's new Asian fund, however, isn't focused solely on the Middle Kingdom. It will also invest in India, where a well-educated and growing middle class is fueling growth in large cities like Mumbai. India, too, has felt the effects of the economic downturn with its GDP growth expected to modulate at 4.5% this year and increase to 5.6% in 2010, according to the IMF.
Shankar Narayanan, a managing director at Carlyle who will oversee the new fund's investments in India, said the country's growth is supported by "vibrant capital markets, a resilient banking system and a pro-business stable government."
The markets for the Carlyle fund share a commonality.
Like India, China is largely a growth capital rather than leveraged buyout market. Earlier this month, New York's Kohlberg Kravis Roberts executed its own minority stake China deal with a roughly $150 million equity infusion in Anhui Province-based Ma Anshan Modern Farming Co. Ltd.
China and India aren't the only Far Eastern nations drawing private equity capital. Other countries, such as South Korea, are also emerging as key destinations for U.S. investment firms looking for deals outside the U.S. where mostly middle-market transactions dominate the buyout landscape (see related story).
KKR, meanwhile, is close to wrapping up its $1.8 billion acquisition of South Korea's Oriental Brewery from Anheuser-Busch InBev.
Debevoise & Plimpton LLP attorneys Erica Berthou, Peter F.G. Schuur, Jonathan Adler, Karl Lee, Ashiru Oladipo, Anne-Lise Quach and Talik Watson served as fund formation counsel to Carlyle on the new fund.
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