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May 23, 2011 at 01:15 PM
The investment unit of China Development Bank Corp. (CDB) was reported on Monday to have agreed to purchase a stake in the U.S. buyout firm TPG Capital. TPG co-founder Jim Coulter attended a signing ceremony in Beijing with China Development Bank Capital Co. to mark the occasion.
CDB and TPG both declined to comment on the news. However, Bloomberg has reported that China has been working to broaden its private equity industry.
CDB, a state policy lender set up in 1994, had more than 5 trillion yuan ($770 billion) in assets as of the end of 2010. Run since 1998 by Chen Yuan, it is the only lender in China to have won a license from the cabinet for the creation of a private equity unit even as outside firms such as Morgan Stanley are raising yuan funds to be invested locally.
CDB Capital was established in August 2009 with 35 billion yuan of registered capital, with the intent to focus on private equity, direct corporate investment and advisory services. CDB Capital’s funds include the China-Africa Development Fund, currently valued at $1 billion.
“CDB’s strong client base and government backing may help TPG get more mega deals in China. On the other hand, it’s a quick way for CDB to benefit from a diversified overseas portfolio,” said Sheng Nan, a Shanghai-based analyst at UOB Kayhian Investment Co., in the Bloomberg report.
