Tags: blackstone | yuan | fund

Blackstone Launches Fund in Yuan

Monday, 23 Nov 2009 03:24 PM

By Marc Davis

China wants to beef up its capital markets and boost private sector growth and Stephen Schwarzman is more than happy to help.

Schwarzman, chairman of the Blackstone Group, world's largest private equity firm, recently signed a deal with the city government of Shanghai to create the first Blackstone fund exclusively denominated in the Chinese yuan.

Capitalized at $732 million, the new fund reflects the increased global respect for Chinese currency and China's burgeoning across-the-board private and institutional wealth.

"Now, more and more deals are being done with local funds," said Wang Chaoyong, chairman of China Equity, a major Beijing equity firm, quoted in a New York Times report.

"Even internationally invested companies are switching to local currency," he said.

But roadblocks still exist which may bar the way to establishing funds in the yuan.

The country is still communist, and capitalist-style private equity investing which requires large sums of money may not appeal to understandably skeptical wealthy private investors and government institutions.

Nevertheless, the trend is gaining momentum, spurred on by the Blackstone venture, which hopes to attract capital from the immense pools of Chinese cash.

Experts warn of a growing bubble in China's property market that could hurt the economy.

Among those issuing the warning is Zhang Xin, chief executive of Soho China, one of the country’s most successful privately-owned real estate developers.

He said the government’s stimulus program is creating a bubble, reports the Financial Times.

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