A few weeks ago, Stephen A. Schwarzman, the chairman of the Blackstone Group, the world’s biggest private equity firm, signed a joint venture here with Shanghai’s municipal government, creating the first Blackstone fund denominated entirely in Chinese currency.
The $732 million fund was the latest example of two trends: global private equity firms seeking to raise capital from increasingly wealthy Chinese individuals and institutions, and the growing international stature of the Chinese currency, formally known as the renminbi.
According to Zero2IPO, a Beijing-based research firm, more than 190 funds denominated in renminbi have been established in the last two and a half years with a combined total of more than $30 billion. In the past, investments in Chinese companies were largely done through offshore holding companies in tax havens like the Cayman Islands.
Chinese private equity funds are emerging in big cities as China promulgates new regulations aimed at creating a homegrown private equity industry, one that Beijing hopes will strengthen the country’s capital markets and fuel private sector growth in an economy overly dependent on government investment [Source].
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