* China authorities hold talks in HK with foreign funds
* Funds registered in Qianhai can raise yuan from HK
* Plans to put foreign funds on more equal footing with
By Stephen Aldred
HONG KONG, July 17 Global private equity funds,
including Blackstone Group L.P. and KKR, have
held early talks with Chinese authorities on a new wave of
renminbi funds which could dramatically improve their chances to
win deals in China, an executive involved in the discussions
China is experimenting with service sector reforms in the
new business zone, Shenzhen-Qianhai, offering freer currency
movements and Hong Kong professional standards, and authorities
held talks on Tuesday in Hong Kong to solicit opinions from
As part of the experiment, any private equity firm
registered in Shenzhen-Qianhai will be allowed to raise a yuan
fund from Hong Kong investors, said John Zhao, CEO of leading
China fund Hony Capital, which has been appointed to bring
leading foreign funds into Qianhai.
The plan is also for foreign funds in Qianhai to ultimately
be able to complete deals without approval from China's Ministry
of Commerce (MOFCOM), which would dramatically accelerate their
investment in the country.
Despite setting up yuan funds in China, firms like
Blackstone, Carlyle Group and TPG Capital can
still face long waits for official approval. That gives local
funds a competitive advantage, as companies seeking investors
usually prefer not to wait.
Zhao confirmed that Hony, which manages foreign and local
money and invests in China and overseas, plans to be among the
first funds to operate in the zone.
"The very first new thing I would try is to raise our next
RMB fund in Hong Kong, and invest it in China," said Zhao.