Study: RMB funds top China deal activity in Q2

However, though much less active, foreign currency funds invested nearly 10 times as much capital in the same period.

RMB funds surpassed funds denominated in a foreign currency in terms of investment activity in China in the second quarter of this year, according to the 'China Private Equity Report Q2 2009' released recently by Zero2IPO, a private equity and venture capital research provider.

Of the total 13 private equity investments made between April and June this year, nine were made by RMB funds and only the remaining four by foreign currency funds, the study said.

This June, Bohai Industrial Investment Fund Management and CDH Investments were among the local private equity investors that acquired a 20 percent stake in car maker Chery Automobile for $293 million, according to The Wall Street Journal.  CDH Investments is an RMB fund targeting RMB5 billion ($732 million; €511 million) while state-backed Bohai Industry Investment Fund is raising RMB20 billion.

However, foreign currency funds made far larger investments compared to RMB funds, investing a total of $4.9 billion against the $406 million invested by RMB funds. An example of such a deal was Asian private equtiy firm SAIF Partners' $15 million investment in Yayi International, a goat milk products company. The investment was made out of the $1.1 billion SAIF Partners III this June.

Overall, the figures on deal activity represented a more than threefold fall from the number of deals made in the same period last year. In contrast, the combined $5.3 billion invested reflected a steep rise of more than 80 percent from the roughly $2.9 billion invested in the same period last year, the study noted. 

Five China-focused funds raised $1.82 billon between April and June, a sharp 84 percent decline from the same period the previous year. Four growth funds accounted for $1.75 billion of this total, the data showed.

There were 13 exits in the second quarter of 2009, a 120 percent rise from the previous year. Of the 13 divestments, 10 were made through initial public offerings (IPO), the study said.