Bain Capital considering RMB fund

NEW YORK (Reuters) - Boston-based private equity giant Bain Capital is considering following a number of its rivals in raising a yuan-denominated fund in China, but said it wouldn't be leading the charge there.

The allure of raising a local currency yuan fund is strong for global private equity firms, some of which have already launched plans to raise funds. But setting up a yuan fund is problematic because only Chinese investors are allowed access under current Chinese rules.

This unique dilemma for fund-raising in China has drawn some concerns from foreign limited partners in some global funds due to potential interest conflict in deal-making.

"The short answer is, of course we're considering it; most of our peers have either done it or announced their intentions to do it," said Bain Capital managing director Mark Nunnelly, at the Reuters Private Equity and Hedge Funds Summit. He spoke in a phone interview from Boston.

He said such a fund would provide an opportunity for potentially having advantage investing in industries where "speed of accomplishing an investment is important."

"It clearly comes with the trade-off -- if you're investing both an RMB-fund and another Western world-currency denominated fund; obviously thinking through all the conflicts between your Chinese LPs and your global LPs is an important issue to tackle," he said.

"So we will likely be a 'fast-follower' not a leader, because we think it is more important to get that complex set of alignments done before, as opposed to figuring it out on the fly."

Nunnelly would not be drawn on how active such plans are, but said that he'd be "very surprised if we have this conversation in 18 months from now and we are not actively managing an RMB fund."

The yuan is also known as Renminbi, or RMB, and was introduced by the Communists and literally means "people's money."

Bain would be following rivals such as Carlyle Group CYL.UL, which said earlier this month it will team up with China's largest non-state-owned conglomerate Fosun Group to launch a $100 million yuan-denominated private equity fund, and Blackstone (BX.N), which has nailed down three commitments so far to its landmark yuan-denominated fund for China.

Bain manages an Asian fund, European fund and a U.S. buyout fund. It has committed about one-third of its North American fund, about 10 percent of the European fund and about 55-60 percent of the Asian fund.

(For summit blog: blogs.reuters.com/summits/)

(Reporting by Megan Davies; Editing by Richard Chang)