The Carlyle Group, the private equity giant, has just announced a five billion dollar joint venture that will buy shipping vessels and related assets in China. The other parties to the deal are Tiger Group Investments, Washington Family, the Seaspan Corporation and Seaspan executives Gerry Wang and Graham Porter.

Carlyle is reportedly planning to contribute $900 million in capital over the next five years. The private equity firm has shown increasing interest in China, which has had substantial economic growth.

Yi Luo, managing director for Carlyle’s Asian buyout group, said, “We believe there is a compelling opportunity to serve Asia’s continuing growth in demand for shipping capacity and are pleased to partner with Gerry and Graham, who have a track record of success in the region.”

The deal is well timed. Overcapacity in the shipping industry has pushed down ship prices, but demand for shipping services is increasing.

Chinese exports surged last year to $1.51 trillion. At the same time, the Chinese economy depends on imports of natural resources like coal and iron ore.

Chinese investment in infrastructure is planned for the near future, which the joint venture is betting will result in more trade flow and more shipping in the region.

San Diego joint venture attorneys speculate that other private equity firms could follow Carlyle’s example. Shipping companies in Europe are looking for capital after several tough years.

Source: New York Times Dealb%k “Carlyle Forms $5 Billion Shipping Joint Venture” 3/14/2011