PE fund briefs, week of Aug. 24, 2009

First Eastern unit to raise $878M China fund

First Eastern Investment Group, a Hong Kong-based private equity firm, aims to raise 6 billion yuan ($878 million) for yuan-denominated funds over the next 12 months to expand its investments in China.

The announcement came after The Blackstone Group unveiled plans earlier this month to launch a 5 billion yuan local-currency fund in partnership with the Shanghai government.

Shanghai competes with other Chinese cities including Tianjin and Beijing in attracting foreign private equity investment as it seeks to foster corporate governance and steps up efforts to become an international financial hub by 2020.

“Capital supply from U.S. dollar investors is shrinking, while in China, there has been increasing demand for managers of yuan funds due to ample liquidity,” says Alex Wang, Shanghai-based partner at U.S. law firm Paul Hastings Janofsky & Walker.

China in June lifted a nine-month ban on IPOs and will this year launch a Nasdaq-style second board, expanding exit channels for private equity and venture capital investors in a stock market that has jumped more than 60% this year.

“Through our local expertise and our expanding global network, I am confident we can add substantial value to aspiring Chinese companies both in China and on international markets,” says Victor Chu, chairman of First Eastern.

First Eastern, founded by Chu two decades ago, has invested in more than 100 ventures in China covering infrastructure projects, light industries, real estate development and financial services.

The firm said it has already been in discussion with local governments on cooperative projects that would benefit from China’s 4 trillion yuan economic stimulus package. —Reuters

Arlington Capital holds first close on third fund

Arlington Capital has held a first close on its third fund, according to a regulatory filing. The vehicle features a a $750 million target, and has secured $204.7 million in commitments from 13 investors. Arlington began circulating its private placement memorandums in January.

Credit Suisse is the firm’s placement agent even though Arlington used UBS for its second fund, a $585 million pool. Apparently UBS told the firm that the leap from $585 million to $750 million was too steep given the environment. Likewise, the firm’s main contact at UBS, Mark Bourgeois, left UBS to go to Lehman Brothers in March 2008.

Arlington, based in Washington, D.C., was founded by Jeffrey Freed and Robert Knibb in 1999. —Erin Griffith

Rockland raises $94.5M

Rockland Capital, an energy-focused private equity firm with offices in New York and Houston, recently held a $94.5 million first close on its debut institutional fund, according to LBO Wire. The fund is being marketed with a $350 million target and a $500 million cap.

Veritas seeks $1.25B

Veritas Capital, a New York-based private equity firm, is raising up to $1.25 billion for its fourth fund, according to a regulatory filing.

UBS Securities is serving as placement agent.

Veritas raised about $300 million for its third fund in 2005, and invests in “middle market companies that provide goods and services to a broad array of government-related customers.”

Canter Equity forms

Canter Equity Partners has formed as a spin-off of Fidelity Equity Partners. The London-based private equity firm is led by Managing Director Sebastian McKinlay and Partners Paul Egan and Stephen Findlay.