CITIC Private Equity raises $1.3B for first fund

CITIC Private Equity Funds Management Co., the private equity investment arm of China’s top brokerage CITIC Securities, announced last week that it has raised 9 billion yuan (or $1.32 billion) for its first industrial investment fund, the largest yuan-denominated private equity type of fund ever raised in China.

The National Council for Social Security Fund, China’s state pension fund, was the largest investor in the fund, named CITIC Mianyang Private Equity Fund, CITIC Private Equity said in a statement last week.

CITIC Private Equity focuses on Chinese companies in four sectors—financial services, consumer goods, energy and resources, and manufacturing—according to the statement. The firm also said it had closed 10 deals with a total transaction value of more than 2 billion yuan (about $290 million) over the past year.

Beijing has been encouraging private equity investment, regarding it as a new channel for corporate funding as banks become increasingly cautious in lending to the private sector.

At least 15 Chinese brokerages, including CITIC Securities, Guoyuan Securities and Changjiang Securities Co. have obtained regulatory approval to start private equity investments, seeking to expand revenue as competition intensifies in the brokerage and investment banking businesses.

CITIC Private Equity, founded in Beijing in June 2008 during the global financial crisis, spent more than a year raising the fund.

The young company soon gained a high profile in the private equity industry, hiring top Chinese dealmaker Liu Lefei as chairman.

Before joining CITIC Private Equity, Liu was chief investment officer for China Life Insurance Co Ltd., China’s top life insurer, where he helped jointly buy control of China’s Guangdong Development Bank with Citigroup Inc. in a landmark $3.1 billion deal. —Michael Wei and Simon Rabinovitch, Reuters