Starr fails to win China buyout JV approval-sources
HONG KONG, Dec 10 (Reuters) - Starr International, an investment firm controlled by U.S. insurance tycoon Maurice "Hank" Greenberg, has failed to win Beijing's approval to launch a planned private equity joint venture with top China brokerage CITIC Securities (600030.SS), sources said on Wednesday.
Early last year, Starr International and CITIC Securities, backed by state-owned conglomerate CITIC Group, jointly announced that they planned a 50/50 private equity fund venture with initial registered capital of 1 billion yuan ($145.5 million).
If successful, it would have become the first private equity fund venture to be launched by a foreign investor and a domestic brokerage in China. Such arrangements lie in a regulatory grey area, with no specific rules governing them.
However, foreign private equity companies have had difficulty in China, where mistrust of western-style leveraged buyouts runs deep among regulators.
Not wishing to set a precedent that other foreign private equity firms might follow, the China Securities Regulatory Commission (CSRC) rejected the planned venture, two sources with direct knowledge of the matter told Reuters.
Instead, the CSRC decided to let CITIC Securities earlier this year set up its own private equity house called CITICS Private Equity Funds Management Co Ltd, which is expected to manage its first investment fund of 6 billion yuan.
It was not immediately clear whether Starr would seek to adjust its proposed joint venture structure to address Beijing's concerns.
The sources declined to be identified due to the sensitive nature of the situation. CITIC Securities declined to comment, while Greenberg, the longtime former chief of American International Group Inc (AIG.N), could not be immediately reached for comment. ($1=6.873 Yuan) (Reporting by George Chen, Editing by Jacqueline Wong)
