Darby to raise RMB fund

Franklin Templeton Darby Private Equity is the latest firm to establish a partnership with Shanghai to establish an RMB-denominated fund.

Franklin Templeton Darby Private Equity (Darby Private Equity) has signed a memorandum of understanding with District Government of Jiading in Shanghai to form a RMB2 billion (€227.7 million; $313.4 million) private equity fund, the firm said in a statement.

The fund is expected to be backed by LPs including the Jiading government’s guidance fund. It will go on to target mid-market enterprises in China.

The fund will be the firm's first RMB-denominated vehicle. But it is no stranger to China, having managed private equity funds in Asia with investments in China since 2002. With the new fund, the firm will have 14 funds under management including the China, India and Korea-focused Darby Asia Mezzanine Fund II which closed on $254 million in October 2007.

Of the development, David Hudson, Darby’s senior managing director for Asia and global infrastructure, said in the statement: “Shanghai Jiading is among the most active private sector economies in Shanghai, with over 100,000 private enterprises. Since Franklin Templeton Darby’s traditional focus has always been mid-cap private companies, Jiading is certainly a good place to start when we begin looking for fast growing and profitable private enterprises to invest in.”

Hudson also noted that his firm was establishing a team in Jiading with the assistance of senior advisor Wu Ching-mai.

In July the firm, through Franklin Templeton Private Equity Strategy, a private equity investment product offered to high net worth individuals which closed on INR6.3 billion in October 2008, was part of a consortium including Aureos Capital and ePlanet Capital that paid a reported sum of INR1 billion to buy 60 percent of Chennai-based e-publishing outsourcing firm Newgen from The Carlyle Group.