Private equity firms preparing to embark on a fresh round of fundraising have been put on high alert by the Chinese government, which has decided to hand its sovereign wealth fund $200bn to pursue new investment opportunities.

The China Investment Corporation has been mandated to help diversify the Chinese state's $3 trillion-plus reserves away from US Treasurys and is expected to focus much of this capital on private equity and other alternative asset classes, according to a February report by Chinese consultancy Z-Ben Advisors.