China is at it again. Chinese government agency, State Administration of Foreign Exchange (Safe), is putting $2.5 billion into TPG’s new fund, says the Financial Times. This becomes the third flank opened by China in recent times to edge into the private equity business.
Last year the government-backed sovereign wealth fund, China Investment Corporation (CIC), bought a 10 per cent stake in Blackstone for $3 billion, just ahead of its initial public offering. Post-Blackstone, CIC has been busy actioning new investment plans — see the Reuters report. Meanwhile, domestic pension fund National Council for Social Security Fund has turned limited partner for domestic buyout funds such as CDH Capital and Hony Capital — Bloomberg report here.
Both TPG and Blackstone are active investors in India, so that gives China an indirect piece of Indian assets. TPG is currently investing in India out of $4 billion Asia fund, 25 per cent of which is supposed to be invested here. Plus, more will come along from the new $17 billion fund it is raising — the one Safe has just invested in. With all the money that China is throwing around wouldn’t it make sense for Indian funds to pitch for some as well? Maybe some have already raised money from China via limited partners based in Hong Kong and Singapore. However they do it, and I’m sure political sensitivities make it a bit tricky, China’s resources could help Indian funds reduce their dependence on North American and European investors.