According to an article in today’s Wall Street Journal (sorry, subscription required), The Carlyle Group has cooked up a deal with the government of Shandong that will provide access to deals in the region.

“… the Washington private-equity firm is investing in a relationship with a local government that it hopes will turn into a pipeline of deals.

Carlyle has signed a memorandum of understanding, to be announced Wednesday, on investment with the government of Shandong province. Carlyle says the relationship will give it first look at deals in China’s No. 2 province by economic output, after Guangdong province. The coastal province of Shandong, south of Beijing, is a powerhouse in industries ranging from chemicals to household appliances to beer.

Private-equity firms like Carlyle, TPG and Blackstone Group LP are scouring China for investments to capture the growth potential of the nation’s companies, as the U.S. market becomes more difficult for buyout firms.”

Perhaps it’s just a coincidence, but late last year, Symbio announced an agreement with government entities in Shandong to establish software training institutes and research centers in Weihai, a key city in the province.  The article continues:

“Carlyle hopes the MOU will help it land more deals in China, a country where local governments play an important role in industry as a shareholder, regulator and promoter of local companies. Carlyle’s agreement is with the province’s Department of Foreign Trade and Economic Cooperation, a division responsible for connecting local companies to foreign investors and promoting the province’s enterprises overseas. Carlyle’s agreement includes plans to help Chinese companies based in Shandong in their efforts to expand overseas.”

I’ve generally heard that the folks at Carlyle are smart operators.  I sure hope that they know what they are getting into when they make investments in China.  Otherwise, they may find that things work in a slightly different manner from that to which they are accustomed.  Based only on unconfirmed rumors regarding some of their prospective targets, I can’t help but wonder.

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