Wednesday, May 9, 2012

Carlyle China Faces Restrictions

China Daily reported:

The National Development and Reform Commission decided last month that all of the capital in a yuan-denominated fund must come from local Chinese investors, or the fund will be classified as foreign and cannot invest in sensitive industries, such as national defense-related companies, and they also face restrictions on investing in industries including resources, telecommunications, education and the Internet.
One senior private equity underwriter (PEU) stated:

"It is rational that yuan-denominated funds managed by a foreign PE company should not be allowed to invest in sensitive industries in China, but such funds should be regarded as domestic, or there is no reason for a foreign company to raise yuan funds." 
The story closed with:

A spokesman for Carlyle China said the firm is studying the NDRC statement, and declined to comment. 
China is heavily invested in global energy resources, including a large shale oil and gas field in South Texas.  If PEU's can't invest strategically in China, they can look elsewhere.  The government gives and takes away, frequently for the benefit of PEU's.