Money

CDB buys TPG stake

By Luo Jun, Cathy Chan and Henry Sanderson (China Daily)
Updated: 2011-05-24 11:12

BEIJING - China Development Bank (CDB) Corp's investment unit has agreed to purchase a stake in the US buyout company TPG Capital, said a person with knowledge of the matter.

TPG co-founder Jim Coulter attended a signing ceremony in Beijing on Monday with China Development Bank Capital Co, according to a copy of the schedule for the event seen by Bloomberg News. Michael Fuchs, an external spokesman for TPG, and Zhang Cheng, vice-president of the strategic planning department for CDB Capital, declined to comment.

TPG and rivals Blackstone Group LP and Carlyle Group are selling stakes in their management companies to raise capital for expanding beyond buyouts as private-equity fundraising remains at an eight-year low. China is stepping up efforts to develop buyout firms even as firms raise yuan funds for local private-equity investments.

"CDB's strong client base and government backing may help TPG get more mega deals in China," said Sheng Nan, a Shanghai-based analyst at UOB Kayhian Investment Co. "On the other hand, it's a quick way for CDB to benefit from a diversified overseas portfolio."

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China Development Bank has sought regulatory approval to buy a minority stake in TPG, the Financial Times reported. TPG sold a stake to Government of Singapore Investment Corp and the Kuwait Investment Authority, a person briefed on the decision said last month. The Fort Worth, Texas-based company plans to use proceeds to finance expansion of new and existing lines of business and to move into emerging markets.

The buyout firm, which manages about $48 billion, has invested $8.1 billion in Asia since the start of 2008, more than Carlyle and KKR & Co, according to the Asian Venture Capital Journal.

China Investment Corp, the nation's $300 billion sovereign wealth fund, owns stakes in Blackstone and Morgan Stanley. It began investing in the US as the credit crunch took hold in 2007. TPG's global investments include Energy Future Holdings Corp, the Texas power producer whose $43.2 billion leveraged buyout in 2007 was the largest in history.

More recently, TPG paid $3 billion to acquire J Crew Group Inc, the retailer it first bought in 1997 and then took public in 2006. TPG also owns the broadcaster Univision Communications Inc and the casino giant Caesars Entertainment Corp.

The largest private-equity companies are increasingly looking beyond buyouts for fees and profits. At Blackstone, the fund of hedge funds business is now the firm's largest by assets. KKR recently hired a partner to oversee real estate investments and plans to start its first long-short hedge fund later this year.

Bloomberg News