（Dow Jones International News
DAVOS, Switzerland (Dow Jones)--Hony Capital Ltd., China's leading private-equity firm, will focus its investment this year in sectors such as infrastructure, construction material and modern agriculture in a bid to adjust to the new economic climate of rising inflation and the country's tightening monetary policy, the company's founder and chief executive said Friday.
"We are also looking at more defensive industries such as modern services, by which I refer to those related to an aging population and the widening social safety net, as well as car rental and repair," John Zhao told Dow Jones Newswires in an interview on the sidelines of the World Economic Forum at Davos, Switzerland.
"In order to cope with an inflationary environment, we also need to extend our investment horizon as well," he said.
Zhao said Beijing's recent slew of measures to further open its rigid capital account, allow more outbound investment and internationalize the use of the yuan will definitely benefit the private-equity industry.
Hony Capital will help some of its ambitious investment targets to venture abroad and grow via acquisitions overseas, he said, adding that such firms need to have a well-established position on their home turf so that future integration between domestic and foreign operations will be smooth.
Despite increasing capital inflows to China, Zhao said he doesn't think China's private-equity market is getting too crowded and overheating. "China's market is so big and when it comes to equity investment, the supply of capital remains in shortage," he said.
Hony Capital, a private-equity unit of Legend Holdings Ltd., has more than CNY30 billion ($4.50 billion) of assets under management and is in the process of raising up to CNY10 billion for its second yuan fund.