A New Tack In China For Equity Firms

For years, private-equity funds have been searching for the best way to invest into China. Now they're looking for ways to get Chinese money out.

In one of the first moves of its kind, RIT Capital Partners PLC -- an investment firm chaired by Jacob Rothschild -- together with local Chinese investment company Creat Group and investment advisory firm Quercus Ventures at the end of March said they plan to raise $750 million in yuan from domestic Chinese investors to invest in overseas companies.

Their efforts to raise funds and get deals done will be a test of how easily private equity will be able to regularly use Chinese money in international markets, something that isn't yet assured of success.

With China growing increasingly wealthy -- and much of the developed world still suffering the effects of the global financial crisis -- fund managers are starting to look toward China as not just an investment destination, but a potential source of funding for deals elsewhere in the world.

Already China has become a major investor internationally, with firms demonstrating a voracious demand for overseas resources and individuals snapping up real estate around the globe. Much of that gets greenlighted by Beijing because it is in the country's strategic interests, or comes from savings amassed overseas.

But China still maintains strict capital controls that make it difficult for the yuan to be changed into foreign currency to make a financial investment. Investment in foreign stock markets can be done only through funds that have a quota to convert a certain amount of foreign exchange for the purpose.

'Regulators like the concept [of outward private equity], particularly when it involves helping Chinese firms go' abroad, says Ying White, a partner at law firm Akin Gump Strauss Hauer & Feld LLP in Beijing. 'But there's a lot of issues that need to be worked out.'

Ms. White says that China's current system for regulating Chinese purchases abroad is geared toward regulators approving each outward investment deal by deal.

That is fine for major firms that make only the occasional strategic purchase, but might prove problematic for a private-equity fund looking to make multiple deals a year. And given the often slow pace of approval, requiring the sign-off of multiple government agencies, there is always the risk of missing a window of opportunity for competitive deals.

So far the early movers are trying to demonstrate that their funds will benefit China's broader interests. J. Rothschild Creat Partners -- the name of the venture between RIT and Creat -- is aiming to invest in foreign firms that have growth opportunities in China, and holds open the potential for Chinese firms to invest alongside them.

That is a similar approach to A Capital, a European-backed fund involved in arranging China-based Fosun International Ltd.'s stake in resort-chain Club Mediterranee SA of France last year.

A Capital has signed a memorandum of understanding with the Beijing municipal government to set up a yuan-denominated fund to invest overseas. The plan is for the fund to sometimes invest alongside firms introduced to it by the Beijing government that are looking to expand abroad.

For the early movers, such political support is likely to be key. RIT is hoping it has that covered. According to Quercus Chief Financial Officer Maxim Parr, the fund already has support from one of the key regulators, the National Development and Reform Commission, China's top economic decision-making body.

And Chairman Zheng Yuewen of Creat Group, which has 20 years of experience investing in China, also heads up the China International Chamber of Commerce for the Private Sector, a government-backed industry group geared to helping private Chinese firms expand overseas.

The fund hopes the chamber's members -- which include high-profile Chinese firms such as Lenovo Group Ltd., Zhejiang Geely Holding Group Co., Shimao Property Holdings Ltd. and Fosun -- will form a base of investors. It hopes to start raising funds in May.

It will initially focus on technology and clean-tech, the green economy, health care, natural resources, and luxury goods, areas where China has already demonstrated a demand for Western expertise and brands.

Thirsty Chinese Move Further into Bordeaux

China's love for Bordeaux is the talk of the wine world. But lately, the Chinese have acquired a taste for something more than just expensive bottles: Some are starting to snap up entire châteaux in the French wine region.

Earlier this month, the Chinese jewelry company Tesiro bought Château Laulan Ducos, a winemaker from the Medoc region. It was at least the fifth purchase of a French vineyard by a Chinese investor, and it is the second deal reported in just a few weeks. In late February, the state-owned company Cofco bought Château de Viaud, a winery in the Lalande de Pomerol region. Cofco also owns the wineries that produce Great Wall wine in China.

Shen Dongjun, who is also known as Richard Shen, is the head of Tesiro. The 42-year-old businessman from Nanjing said he visited more than 50 properties before deciding on Château Laulan Ducos and its 22 hectares. The price of the transaction was not disclosed.

In an email to Scene, Mr. Shen said that while wine consumption has grown considerably in China, the country has a long way to go before wine culture becomes mainstream. 'I will consider it as a long journey of education and communication. The demand on high-end wines [in China], as well as the wine culture, is rising every year. So, I would like to define myself not only (as a) trader and seller of French wine, but also (as an) introducer of wine culture.'

At Laulan Ducos, Mr. Shen plans to discontinue sales of the vineyard's bottles within France and focus on selling bottles solely in China. Mr. Shen said he intends to sell the wine through wholesale and retail channels, and also plans to open boutique wine shops in China using the château's name.

Francois Ducos, the previous owner of the château, will remain as Laulan Ducos's winemaker. He said the decision to sell was 'a very personal one, a difficult family decision, but it allows me to focus on my work as a winemaker.'

Captain Jack also nail? "Pirates of the Caribbean"limited edition nail polish

OPI has captured the bright colours seen in Disney & Jerry Bruckheimer Films’ Pirates of the Caribbean: On Stranger Tides with a collection of six limited-edition Nail Lacquers and a new Silver Shatter! The highly anticipated fourth installment of the film franchise features an all-star cast, including Johnny Depp and Penelope Cruz.

The Pirates of the Caribbean: On Stranger Tides collection includes:

Skull & Glossbones: Best light gray ever, no bones about it.

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Silver Shatter: A shimmering sea of silver with a two-texture finish.

This limited-edition collection, available from 1st May.

Since late last week, when Indian magazines and newspapers published tapes and transcripts of purported conversations between influential lobbyist Niira Radia

India Real Time spoke to media critic Sevanti Ninan, editor of the watchdog site The Hoot, via e-mail for her views on the tale told by the tapes. (Ms. Ninan has a piece called ' Oh what a lovely blackout,' on the recordings and how they have been covered in the Indian media on The Hoot on Tuesday.) Edited excerpts:

IRT: As a long-time media observer, what do the transcripts and recordings, and the responses by the journalists, tell you about Indian journalism today?

Ninan:I have read the transcripts and listened to some of the recordings, not all. They tell me that some journalistsâ 'not all, but some big onesâ 'have an incestuous relationship with people in power. Also that they have their guard down with regard to lobbyists for industrial houses, and top public relations people in general. They also tell me that journalists are not sufficiently discriminating about the ways in which they use their access to those whom they report on.

IRT: What do you think of the news coverage of the phone taps story so far across different platforms in the Indian media, including print, web and television?

Ninan: Covering the story has been the exception rather than the norm. All Delhi papers except one have chosen to ignore the story. All TV news channels too.The silence is deafening. The South has not been quite so uniform in blacking out the story. The Hoot was started primarily because the Indian media does not cover itself. That has begun to change though, so I am surprised that more news organizations have not had the gumption to report the tapes with regard to the media, as they have been doing with regard to other dimensions of the 2G scam. (The tapes surfaced in the midst of an increasing political outcry over the allocation of second generation spectrum to phone companies in 2008 by former telecom minister A. Raja, who resigned on Nov. 14 but maintains his innocence.â 'IRT)

IRT: Do Indian newsrooms have well-developed ethic policies that journalists are familiar with and adhere to?

Ninan:Some do and some don't. I am sure NDTV will say it does. But the policies are meant for working journalists and I am not sure editors, editorial directors and star anchors believe these apply to them.

IRT: The Indian news media has been experiencing a boom for at least a decade. What effect has this fast-paced growth had on ethics policies and have they been able to keep pace?

Ninan:Well, as some aspects of journalism grow, such as business journalism, ethics policies have evolved. TV news has grown so rapidly that there are not enough senior news editors and gatekeepers around to train people coming into the profession in these matters. Competition also makes a lot of ethical safeguards fly out of the window.

IRT: Where do you see the biggest gaps in news gathering and reporting in India and what recommendations would you make to fix these?

Ninan:That would take too long to answer. Basically each news organization has to make sure it has a seasoned, sharp, and ethically oriented news editor or resident editor as a gatekeeper. And it's time everybody had a readers' editor who has the independence to do his or her job well.

Questions about what caused a deadly bridge stampede

Cambodia's capital late Monday mounted as the country prepared for a day of mourning later in the week.

The death toll from the stampede, at the end of Cambodia's annual water festival, rose to 378 on Tuesday, with hundreds more injured. Many of the injured rested on mats in the hallways of Phnom Penh's main hospital, which didn't have enough rooms for the victims, while relatives identified bodies laid out at the back of property. Authorities trawled waters beneath the bridge where the disaster occurred for more bodies.

It wasn't clear what triggered the stampede. Some witnesses said it was set off when a handful of festival-goers crossing the crowded bridge, between downtown Phnom Penh and a nearby river island, fell unconscious, triggering a panic. Efforts to escape intensified the gridlock, as people pushed in both directions, immobilizing the crowd. Many people said they were unable to move anything but their heads for more than an hour, in some cases resting on top of dead bodies.

Survivors said they were convinced that some of the victims had been electrocuted after authorities allegedly sprayed water onto the bridge to help disperse the crowds. The bridge was illuminated with bright lights, but it was unclear whether water could have triggered any electrocutions.

Many victims were screaming for authorities to cut off the electricity, said Ly Chea Oun, a 17-year-old Phnom Penh student, who said several people were electrocuted as he lay stuck in the tangle of bodies. He had nearly made it across the bridge when leaving the island, but got stuck when a tide of people overwhelmed him. He was later rescued and taken to the hospital.

Government spokesmen denied that water cannons were used or that people were electrocuted, and said they were still trying to determine the full cause of the disaster. Prime Minister Hun Sen ordered an investigation and said Thursday would be a national day of mourning.

North Korea fired scores of artillery rockets at South Korea's Big Yeonpyeong island Tuesday afternoon

One South Korean Marine was killed in the skirmish and at least a dozen more were injured, military officials said.

Photos sent to South Korean TV stations by residents of nearby Small Yeonpyeong island showed multiple plumes of smoke rising over its larger neighbor.

A spokesman for South Korea's Joint Chief of Staff said 'scores of rounds' were fired by the North.

'The whole neighborhood is on fire,' said Na Young-ok, a 46-year-old woman who has lived on the island for 20 years. She was at a bomb shelter when reached by The Wall Street Journal. 'I think countless houses are on fire, but no fire truck is coming. We have a fire station but the shots are intermittently coming.'

Ms. Na said a military base on the island was on fire. She said she was with about 50 people in the shelter and said her child was in a similar shelter at the school on the island. She said she didn't know whether people were injured.

South Korean President Lee Myung-bak convened an emergency meeting of defense and security-related agencies.

Some units of the South Korean military had been training in waters near the two islands earlier and North Korea complained earlier this week about the exercise, a presidential spokeswoman said. 'We're examining a possible link' between the complaint and the attack, the spokeswoman said.

The artillery--more than 50 rounds, according to island residents speaking on South Korea's YTN--was fired from positions south of the North Korean city of Haeju.

The attack started at 2:34 p.m. local time. Electricity was cut off on the island and people moved to bomb shelters, residents told YTN.

About 1,200 people live on the island, which is just 10 kilometers south of the tip of North Korea's south coast.

The attack is the second by North Korea this year against South Korea in the disputed maritime border area of the Yellow Sea. In March, a North Korean submarine torpedoed and sank a South Korean warship near an island about 40 miles west of the island that was hit on Tuesday.

The Yeonpyeong islands are the eastern-most of five small islands within close-firing range of North Korea. All are just a few kilometers away from the maritime border known in South Korea as the Northern Limit Line, or NLL, that was drawn up by the United Nations after the end of the Korean War in 1953.

The North has objected to the line since the early 1970s, arguing in part that the line forces its ships to take lengthy detours to international shipping lanes. Its objections intensified in the 1990s and led to two deadly skirmishes in the area in 1999 and 2002.

Rescuers attempting to locate 29 workers trapped in a collapsed New Zealand coal mine are being hindered by poisonous gas

Prime Minister John Key and Energy Minister Gerry Brownlee both visited the scene of the disaster over the weekend and expressed hope that engineers could draw on lessons from the unlikely rescue of 33 miners trapped underground for 69 days in Chile last month. Australian Prime Minister Julia Gillard and Chile's government both offered assistance.

A combination of poisonous gas and indications of a fire inside the mine so far have stopped any direct efforts by engineers to locate and extract the miners, who have been unreachable since an explosion was reported at 3:50 p.m. local time on Friday. Unlike in the Chile mine disaster, the New Zealand mine's shaft is sunk horizontally -- allowing access for heavy machinery that could assist a rescue -- but engineers are wary of a secondary explosion.

New Zealand's only listed coal mine operator, Pike River is about 29% owned by New Zealand Oil & Gas Ltd., with India's Saurashtra World Holding Private Ltd. and Gujarat NRE Coke Ltd owning 5.5% and 7.1% respectively. Its shares traded in New Zealand closed down 4.4% on Friday and shares listed in Australia are suspended.

Pike River has missed several of its own production targets at the pit in the past 18 months and has been forced to raise additional funds to keep the mine working.