Private Equity International Asia Origo Partners in $75 million RMB fund initiative

Private Equity International Asia Origo Partners in $75 million RMB fund initiative

Origo’s maiden RMB fund to be established in partnership with the Xinxiang municipal government will focus on clean technology.

Origo Partners, an AIM-listed private equity investment and consulting company, has signed a memorandum of understanding with the Xinxiang municipal government to set up an RMB-denominated fund that will target commitments equivalent to $75 million.

The Origo China Sustainable Development Fund will receive an $18 million anchor investment from the Xinxiang municipal government. The fund will target fast-growing private Chinese companies in the clean technology and sustainable development sectors, the firm said in a statement. Its areas of focus will include renewable energy, electric vehicles, waste recycling, energy storage and distribution, sustainable agriculture and water related technologies.

The fund will be managed by Origo and is expected to see a first close in 2010. This fund will be the first in a series of funds Origo will raise for the domestic Chinese market, Chris Rynning, chief executive officer of Origo, said in a statement.

A number of private equity firms have, in recent months, outlined plans to raise RMB-denominated private equity funds in partnership with local Chinese authorities and institutions. Most recently, Taiwanese financial holding company Fubon Financial entered into a three-way partnership with China Development Bank and the Fujian provincial government to reportedly raise RMB5 billion (€545.5 million; $732.4 million) for a fund that will invest in businesses in China and Taiwan.

Fundraising in RMB has become increasingly popular since the Shanghai Pudong New Area initiative came into practice in 2009. Last year, private equity funds denominated in Chinese yuan raised more capital than US dollar-denominated funds for the first time ever. Of the $13 billion raised by funds investing either only in China or with an exposure to China, a whopping $8.73 billion was raised by 21 RMB-denominated funds, more than twice the amount raised by funds denominated in USD, according to Chinese private equity service provider Zero2IPO Research Centre.

A few other foreign firms raising RMB-denominated funds include The Blackstone Group, The Carlyle Group, Abax Global Capital, Prax Capital,  First Eastern Investment Group and CLSA Asia-Pacific Markets.