Fosun Group, the largest privately-owned conglomerate in China, said Wednesday it agreed to partner with U.S. buyout giant Carlyle Group to launch a yuan-denominated private equity fund in Shanghai.

Fosun and Carlyle will jointly sponsor and manage the co-branded onshore fund, leveraging the two giants' acumen in identifying growth opportunities and Fosun's extensive connections in China.

Carlyle co-founder and managing director David Rubenstein said the fund, with an initial investment of 100 million U.S. dollars, could start operating immediately and target local small growth companies.

The companies did not reveal their stakes in the fund.

"By working with local partners like Fosun, we expect to market investments that benefit small growth companies and enhance the local private equity industry," Rubenstein said in a statement.

The two companies would soon seek to raise more capital from local investors for future yuan-denominated private equity funds, Rubenstein said.

The companies would continue to carry out strategic cooperation worldwide to invest in high-growth Chinese companies and global businesses that could benefit from China's growth.

Carlyle has taken a further step and made inroads into the Chinese private equity market as the Chinese government encourages the development of local private equity funds.

Carlyle earlier in January signed a memorandum of understanding with the financial arm of Beijing municipal government to launch a yuan-denominated fund in Beijing targeting larger growth companies.

Rubenstein said the fund was set to begin operating and was in the process of capital raising.

It is the two companies' second cooperation since last September when they took stakes in Guangdong Yashili Group Co., a major Chinese baby formula maker.

Fosun runs businesses covering pharmaceuticals, property development, steel, mining, retail, services and strategic investments with assets exceeding 10 billion U.S. dollars.