* New fund expected to concentrate on acquisitions
* Slowing capital markets, new regs spur M&A in China
* Fund to benefit from China growth, structural changes-CEO
By Stephen Aldred
HONG KONG, Nov 14 China-focused private equity
firm Fountainvest Partners, headed by ex-Temasek
executive Frank Tang, has raised $1.35 billion in its second
fund, the company said on Wednesday, defying tight fundraising
conditions in Asia.
Founded in 2007 by four former Temasek executives from the
Singapore state investor's China team, Fountainvest's new fund
is about 40 percent bigger than its $950 million debut fund in
Since then, the fundraising climate in Asia has deteriorated
as pension funds and endowments have been disappointed with
returns from the last batch of funds they seeded in the region,
making them cautious about putting money into new funds.
Still, Fountainvest was able to raise the new funds in a
relatively quick eight months, a source familiar with the matter
There are now more than 5,000 private equity funds in China,
with $261 billion of capital raised and $126 billion invested
since 2006, according to a Deutsche Boerse report released this
CEO Tang said the current economic slowdown in China
presents opportunities for Fountainvest to build companies that
will benefit from China's growth and structural changes.
The new fund, Fountainvest China Growth Capital Fund II LP,
will invest in high-growth businesses that need between $50-200
million of equity.
Fountainvest used its debut fund to invest in U.S.-listed
Sina Corp and Zhaoheng Hydropower Co.
The firm is currently involved in buyout deals of two
U.S.-listed Chinese firms - a $3.5 billion bid for display
advertising firm Focus Media Holding Ltd and a $635
million offer for budget hotel chain 7 Days Group Holdings Ltd
Several high-profile funds, including, Washington State
Investment Board, San Diego County Employees Retirement
Association, Temasek Holdings, California State Teachers'
Retirement System, and Canada Pension Plan Investment Board,
have invested in the new fund, the source said.
The firm is expected to pour more of its money into buyouts
compared to the debut fund, as slowing capital markets and new
regulations encourage private equity to accelerate the use of
M&A in China.