China-focused private equity fund FountainVest Partners yesterday opened its doors in Shanghai from where it will focus on mainland investments. The firm already has an office in Hong Kong.

FountainVest was founded in December 2007 and recently closed a fund-raising of $1 billion with backing from investors including Canada Pension Plan Investment Board, Ontario Teachers' Pension Plan, and Temasek Holdings, as well as other investors from Asia, Europe and North America. For many of these investors, FountainVest was the first China private equity fund they committed money to.

FountainVest set out to raise $750 million with a 10-year term, but upsized the amount to $1 billion due to the solid demand. FountainVest's success corroborates that investors still have appetite for private equity funds with distinct and well-defined value propositions, which are highly focused and bring relevant experience to the table.

FountainVest will focus on deals in the $50 million to $100 million range and expects to make 15-20 investments in China over the next four to five years.

The firm is founded and managed by a team of four partners: Frank Tang, Terry Hu, George Chuang and Chenning Zhao. The four have a strong background with regard to doing deals in China and have all worked for Singapore-based investment firm Temasek at one point in time.

Tang, who is the CEO, was a senior managing director at Temasek and headed China investment. Before he joined Temasek, he spent 11 years at Goldman Sachs. Hu was head of global real estate investments at Temasek, having joined the Singapore investment company from Credit Suisse where he headed China technology, media and telecommunications. Chuang was also a managing director at Temasek and was earlier with Goldman Sachs focusing on China. Zhao worked at JPMorgan Partners Asia (CCMP) with a focus on China investments before he moved to Temasek.

"Despite the global economic downturn, we are optimistic about China's long-term growth prospects," says Tang. "We believe that the investment opportunities in China have just begun to emerge. The transformation of consumption in China will be the driving force for growth in the coming decades."