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Providence latest private equity giant to eye yuan-denominated fund

29 May 2013

china-flag-chineseProvidence Equity Partners is reportedly the latest private equity major to target a yuan-denominated fund as China relaxes its restraints on foreign capital flows.

The firm I set to join a host of global buyout houses including The Carlyle Group, Goldman Sachs and TPG Capital in raising a renminbi vehicle according to Dow Jones, which cited people familiar with the matter.

Blackstone and KKR were believed to be in talks with Chinese authorities last July over a “new wave” of renminbi-denominated funds which would improve their competitive clout in the country.

The world’s second largest economy is experimenting with service sector reforms in Shenzhen-Qianhai, the new business zone, offering more liberal currency flows and Hong Kong professional standards.

Those reforms were cemented in March when the government agreed to ease regulations, allowing private equity firms to hold fundraisings in Hong Kong for investments in mainland China.

Those rule changes have also been approved by the National Development and Reform Commission, while Reuters said at the time the China Development Bank was already preparing to raise RMB50bn ($8bn) from Hong Kong for its Qianhai-based fund.

Domestic private equity firm Hony Capital was earlier appointed to bring renowned foreign funds into the zone, a move which would eventually mean those funds could complete deals without the approval of China’s Ministry of Commerce.

Although firms such as Blackstone, Carlyle and TPG have already set up yuan funds in the country they can still face long waits for official approval, giving domestic rivals a competitive advantage.

Providence, which has $28bn of commitments to its funds, focuses on media, communications, education and information investments.

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