Private-Equity Funds Turn to Yuan Offerings, Defying Wider Slowdown in China, Wall Street Journal, Jan. 28, 2023.
By Jing Yang
Global firms eye deeper foothold in China with yuan-denominated funds
Some international private-equity firms investing in China are choosing to denominate new funds in the country’s local currency, going against a wider slowdown in global demand for bets on Chinese startups. The appetite for allocating capital to funds focused on China has waned over the past year, the result of factors including tensions between Beijing and Washington, higher US interest rates and a prolonged crackdown on China’s once-hot internet sector. US dollar capital raised by China-focused private-equity funds plunged more than 80% to just under $23 billion in 2022, the lowest amount raised since 2010, according to data from Preqin Pro. Yuan-denominated funds have held up much better. The equivalent of around $455 billion was raised by yuan funds in 2022, just 4% down on the year before, according to data from Zero2IPO, a Chinese private-equity data provider. These yuan funds are getting demand from a mix of local and international investors. L Catterton’s new vehicle has secured investment from Chinese government-backed funds, local consumer companies and multinationals. The global firm, which manages more than $30 billion and counts LVMH Moët Hennessy Louis Vuitton SE’s chairman Bernard Arnault as one of its backers, has previously taken stakes in popular Chinese consumer labels such as beverage brand Genki Forest.