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.
