Report: SAIF Partners raises RMB1.6bn fund

SAIF Partners reportedly joins a growing number of non-state backed private equity firms in China to raise yuan-denominated funds.

SAIF Partners has raised RMB1.6 billion (€178 million; $233 million) for its first yuan-denominated private equity fund, sources told Reuters. Limited partners in the fund include Chinese private companies and other local high net worth individuals, the report added.

SAIF currently manages more than $2.2 billion across three funds. The firm closed its third fund on $1.1 billion in 2007. The firm broadly focuses on investments in growth sectors such as consumer products and services, TMT, financial services, healthcare, travel and tourism, and manufacturing. It makes investments in China, India, Hong Kong and Taiwan.

The firm has made more than 100 investments in China thus far and drew a lot of attention when its $40 million investment in China’s Shanda Interactive Entertainment returned $520 million, a 13 times multiple in 22 months. The company went public on the Nasdaq in May 2004. 

SAIF was established in 2001 as a part of Japanese media and telecommunication company Softbank Corporation. Cisco Systems was the lone investor in the firm’s maiden $400 million fund. The team gained its independence in 2005 and raised $643 million for its second fund.

The Chinese government has been taking initiatives to promote private equity in the country, particularly the setting up of yuan-denominated funds. Firms like CDH Investments and Hony Capital have already set up such funds. CCB International, the Hong Kong-based investment arm of China Construction Bank also said it plans to launch an RMB5 billion yuan healthcare fund, while Sequoia Capital reportedly closed a RMB1 billion fund earlier in the year.

Other firms such as CITIC Capital, CITIC Securities and Softbank China Venture Capital are also either setting up RMB funds or are in the process of doing so.

Earlier this week though, Chinese regulators rejected plans for a joint venture yuan-denominated private equity fund between CITIC Securities and Starr International.

SAIF Partners declined to comment.