China fund in talks to buy stake in US private equity firms

Updated: 2007-10-30 10:18

Three of the biggest US private equity firms have held preliminary talks about selling minority stakes to China's giant Social Security Fund, the Financial Times said on Tuesday.

The fund, which had 460 billion yuan (US$61.5 billion) in assets at the end of June, held discussions during the summer with the Carlyle Group, Kohlberg, Kravis, Roberts & Co and TPG, formerly known as Texas Pacific Group, the report said, citing people familiar with the negotiations.

It said negotiations would focus on the possibility that the Chinese fund would take a stake of up to 9.9 percent in one of the US firms.

The newspaper said negotiations between the US firms and the Chinese fund have largely stalled since summer, reflecting the Chinese reaction to China Investment Corp's minority investment in US private equity firm Blackstone Group.

It said the fall in Blackstone's share price from US$31 since its listing in June had left Chinese investors leery about similar deals. Blackstone shares ended trade at US$25.50 on Monday.

An official in the overseas investment bureau of the Chinese fund declined comment, saying he was unaware of such talks, the newspaper said.

China's Social Security Fund, a national social security fund of last resort, has been allowed to invest abroad since May 1, 2006, the Financial Times said.

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