HONG KONG, Aug 28 Reuters Chinese private equity firm Trustar Capital is planning to raise a socalled continuation fund that would allow it to sell down its stake in McDonald39;s China, two sources with knowledge of the matter said.

The new fund would also allow investors in Trustar39;s existing fund tied to McDonald39;s China unit cash in on their investments, said the people, who declined to be named as the information was confidential.

That plan would be achieved by Trustar, formerly known as CITIC Capital, transferring some equity interest in McDonald39;s China from its private equity PE fund into the continuation fund, a new investment vehicle that would manage the asset.

During the fundraising process for the continuation fund, investors in Trustar39;s PE fund, known as limited partners, would have the option to sell their shares in McDonald39;s China and cash out, said the people.

The size and structure of the continuation fund have not been finalised as Trustar is still gauging interest, but the owners are targeting a valuation of 10 billion for McDonald39;s China in the process, said the people.

Trustar39;s move underscores how PE firms are looking for alternative liquidity options amid volatile capital markets and higher interest rates that make initial public offerings or sales difficult.

Trustar is in preliminary talks with Singaporean and Abu Dhabi39;s sovereign wealth funds GIC and Mubadala respectively, among others, for anchor investments in the…