China has been advised by the UK government on how to establish a thriving private equity industry, with the Treasury passing papers on tax and regulation to Beijing as London seeks a strategic advantage over the US.
The advice, coupled with discussions between top UK buy-out executives and Beijing officials, may give London a head start in the tussle with New York for influence in China, widely seen as private equity's next Eldorado.
“The Chinese are very keen to develop a domestic market,” said Dag Detter, senior advisor to Terra Firma, the UK buy-out firm, who has worked with the Chinese government on private equity.
“Their leadership rightly believes that doing so would further stimulate growth and strengthen the country's business sector, and the UK's participants are happy to help,” said Mr Detter.
The strength of Anglo-Sino ties on private equity will be underlined tomorrow when the Boao Forum, Asia's equivalent to Davos, comes to London for its first conference outside the continent.
“Yes, we have pointed them in the right direction by passing on papers about a range of fiscal and regulation policies for private equity,” said a senior Treasury official.
“But this is not about us pushing this stuff down their throat, as there is huge appetite from the Chinese to learn about how the UK has encouraged private equity,” he said.
A flood of private equity groups are pouring into China in search of investment opportunities amid its rapid economic growth, especially as the credit squeeze has made it harder to fund big buy-outs in the US and Europe.
But Western private equity firms have found it hard to deploy large amounts of capital in a tightly regulated market where many sectors such as defence, media and energy are considered off-limits.
In the year to mid-May, private equity firms had deployed only $512.4m (£259m) in China, against $624.4m in the year-ago period, according to Thomson Reuters.
China has been advised by the UK government on how to establish a thriving private equity industry, with the Treasury passing papers on tax and regulation to Beijing as London seeks a strategic advantage over the US.
The advice, coupled with discussions between top UK buy-out executives and Beijing officials, may give London a head start in the tussle with New York for influence in China, widely seen as private equity's next Eldorado.
“The Chinese are very keen to develop a domestic market,” said Dag Detter, senior advisor to Terra Firma, the UK buy-out firm, who has worked with the Chinese government on private equity.
“Their leadership rightly believes that doing so would further stimulate growth and strengthen the country's business sector, and the UK's participants are happy to help,” said Mr Detter.
The strength of Anglo-Sino ties on private equity will be underlined tomorrow when the Boao Forum, Asia's equivalent to Davos, comes to London for its first conference outside the continent.
“Yes, we have pointed them in the right direction by passing on papers about a range of fiscal and regulation policies for private equity,” said a senior Treasury official.
“But this is not about us pushing this stuff down their throat, as there is huge appetite from the Chinese to learn about how the UK has encouraged private equity,” he said.
A flood of private equity groups are pouring into China in search of investment opportunities amid its rapid economic growth, especially as the credit squeeze has made it harder to fund big buy-outs in the US and Europe.
But Western private equity firms have found it hard to deploy large amounts of capital in a tightly regulated market where many sectors such as defence, media and energy are considered off-limits.
In the year to mid-May, private equity firms had deployed only $512.4m (£259m) in China, against $624.4m in the year-ago period, according to Thomson Reuters.