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China Dubai Capital revises fundraising timeline

Backed by Dubai International Capital and First Eastern Investment Group, the fund’s plans to close on $1bn by October have been dashed by investors’ lack of liquidity.

China Dubai Capital, a China-focused fund managed jointly by Dubai International Capital and Hong Kong’s First Eastern Investment Group, has revised its original target of raising $1 billion by October due to the shifting financial landscape.

“The world has changed” since the fund was launched in April, a spokesman for DIC said.

“China is still a very good place to invest money,” he stressed, but noted that the world financial crisis affecting an increasing number of investors means “realistically, it takes longer” to raise funds in today’s marketplace.

“We’ll get there eventually,” he said, but declined to provide a timeline or details of commitments garnered to date. “We’ll be opportunistic,” he added.

Making smaller, or in some cases zero, commitments amid these turbulent times is a prevalent trend among Middle Eastern limited partners, Edward Frazer, founder and chief executive of placement agent Trinity Group, recently told sister magazine Private Equity International.

“We get so many calls from so many people thinking that going to the Middle East is Nirvana because of all their liquidity,” Frazer said. He noted that the sharp drop in oil prices, coupled with some disastrous financial sector bets and reeling global equity portfolios are impacting Middle Eastern LPs’ budgets and investment decisions.

China Dubai Capital had said in April it planned to hold a first close in May “with at least $500 million from investors predominantly in Asia and the GCC”, and a final close in October on $1 billion.

It plans to make growth investments in Chinese companies looking to increase their presence in the UAE and or with potential to be listed on the Dubai stock markets.

Victor Chu, Great Eastern’s chairman, said at a conference in Dubai yesterday that “the quickest revival of the economy can be achieved by reconnecting the Silk Route. This will enable China and the GCC region to combine their liquidity and resources to rebuild markets and restore confidence in the global economy.”