News in brief

• As news breaks that KKR is to follow in Blackstone’s footsteps and is preparing a listing on the New York Stock Exchange, Blackstone continued to trade below its listing price of US$31 per unit. Last night it closed at US$29.7 per unit. This is against a continued nervousness that private equity has reached the top of the market.

CDC, a UK government-backed emerging market fund of funds, has made allocations totalling US$100m to two China-focused private equity funds. The fund invested US$75m in CDH China Fund III, which provides growth capital of US$30m–$50m to mid-market Chinese companies as well as investing in a small number of larger buyouts or state-owned enterprise restructuring deals. CDH is targeting US$1.6bn for Fund III. CDC’s second investment was a US$25m allocation to CITIC Capital Partners, as part of the total US$425m raised for CITIC Group’s debut fund, which had an original target of US$250m. The fund will primarily target buyouts of state-owned enterprises, as well as growth capital transactions of US$30m–$40m. CITIC Capital has already completed a US$110m buyout of Harbin Pharmaceuticals alongside Warburg Pincus. To date, CDC has committed more than US$300m to private equity funds in China. According to the Asian Venture Capital Journal, private equity investment in China in 2006 totalled US$6.9bn, with expectations that 2007 levels will remain buoyant.

SVG Advisers, the fund advisory arm of listed UK investment group SVG Capital, has held a final close of Strategic Recovery Fund II, its second vehicle applying private equity techniques to public equities. SRF II corralled £70.2m, more than four times its 2004 predecessor, which raised £15m and has delivered a net IRR of 46% to investors. 3i Quoted Private Equity, which raised £400m for direct investments in pubic equities in June, was a cornerstone investor in SRF II, alongside institutional investors and family offices. “The successful final close of the SRF II illustrates the continued interest and appetite for our style of investment,” said Tony Dalwood, head of public equities at SVG Investment Managers, which built the public equity team in 2002. “We believe numerous opportunities remain to create value within the small and mid-cap universe of the UK public market,” he added. The team has access to a strategic advisory board of experienced industrialists providing advice on strategy, operations or management.

3i Quoted Private Equity raised the full £400m target proceeds in its IPO, including the £188m taken by 3i itself. ABN AMRO Rothschild was bookrunner for a deal that shows the continuing life of permanent capital vehicles when appropriately sized and structured. At one point it is not clear whether the full £400m of proceeds would be achieved after Saltus European Debt Strategies and F&C Event Driven Fund both came in short of expectation.