SHK Fund eyes onshore China PE fund

By Jeffrey Hodgson

HONG KONG (Reuters) - SHK Fund Management is in talks with a mainland Chinese financial firm about teaming up to launch an onshore private equity fund to finance capital-hungry companies.

The fund would likely be at least $50-$100 million in size and positioned to do deals with Chinese companies caught out by the global credit crunch, SHK Fund Management Chief Executive Christophe Lee said on Tuesday.

"There is a big mismatch between how you can get your hands on some funding in China as a private entrepreneur, and the system that provides it.

"There's always going to be an oversupply of people that have growing businesses," he told the Reuters Hedge Funds and Private Equity Summit in Hong Kong.

"I think (homegrown) private equity as a sector will just completely take off in China in the next few years."

The unit of financial group Sun Hung Kai & Co Ltd (0086.HK: Quote, Profile, Research, Stock Buzz) has about $900 million in assets under management. This includes its existing $100 million SHK Asian Opportunities private equity fund.

A growing number of foreign private equity firms frustrated by red tape in their efforts to buy Chinese companies are setting up funds onshore.

Traditionally, private equity funds and Chinese entrepreneurs transferred ownership of companies offshore, with many seeking listings abroad. But China has gradually been plugging that exit route with regulation.  Continued...