Prudential China fund to invest abroad

The $600m partnership with China's Fosun Group will make public and private investments both domestically and overseas.

Following an announcement in January of the partnership between Prudential Financial and Chinese conglomerate Fosun Group, the pair have signed a definitive agreement to establish the Pramerica-Fosun China Opportunity Fund.

According to a statement, the fund will make investments in various sectors and asset classes, including both private and public companies based in China and companies outside of China with significant revenue or other business connections to China.

While the fund was originally understood to be focused on China, at a press conference Monday Fosun chairman Guangchang Guo said valuations of some foreign companies are more attractive due to a decrease in consumption demand and lack of available financing as a result of the financial crisis, according to MarketWatch.

“Since last year, there has been exponential growth in China’s private equity activities. The hundreds of private equity firms are chasing deals at the same time and driving up prices,” Guo reportedly said.

Prudential is investing $500 million in the partnership, with $100 million coming from Fosun, which will be in charge of investment decisions.

It is not the first time Fosun has formed a foreign-partnership joint venture. In February 2010, the conglomerate established the Shanghai-domiciled RMB fund with The Carlyle Group. With the two parties each committing $50 million, the fund mirrors the strategies of Carlyle’s Asia Growth Capital Group.

Prudential also has other private equity operations. Prudential Capital Group, a division of Prudential Financial, is the sponsor of Prudential Capital Partners, a mezzanine investment firm. Prudential Capital Partners closed its most recent mezzanine fund on $965 million in 2009.