China

Private equity and venture capital research, reports and surveys with a focus on China

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• Food for Thoughts - China’s food industry heads for massive correction 15 Oct 2008. Source: Asia Private Equity Review (APER). China’s food industry will never be the same, as the current contamination scare continues to widen and consumers are gripped with fear, according to this Asia Private Equity Review (APER) article.

• China’s private equity landscape 17 Sep 2008. Source: Weil, Gotshal & Manges. Peter Feist, Anthony Wang, Sidney Qin. Private equity investments in China continue to attract significant attention across the private equity spectrum from global buy-out funds, venture capital funds, regional funds and other investors. Unlike more developed markets where control transactions are often the focus for many investors, private equity investing in China generally takes the form of minority growth capital or pre-IPO investments in businesses where the Chinese founders or management have controlling or significant stakes, according to this article from Weil, Gotshal & Manges.

• Looking to the future: leveraged finance transactions in China 16 Sep 2008. Source: Lovells. Fred Chang and Ying Zhao. This article from Lovells focuses on the acquisition of Chinese listed companies by foreign-organised acquirers, examines why some types of takeovers by foreign entities are possible and looks at alternative methods by which leveraged debt could be employed in the acquisition.

• Down times: tepid response to PE-backed companies 16 Jul 2008. Source: Asia Private Equity Review (APER). One day, two private equity-backed companies were listed. On 12 June, the Stock Exchange of Hong Kong played host to the listing debuts of Little Sheep Group Ltd. and A8 Digital Music Holdings. The Inner Mongolia-headquartered franchise restaurant operator is backed by 3i Group and Prax Capital. A8 attracted a long list of private equity investors, including IDG Technology Venture Investment, KPCB China, Intel Capital and JAFCO Asia.

• Voices for reform: institutional changes are on the horizon as calls for reform gain momentum 11 Jun 2008. Source: Asia Private Equity Review (APER). A new era is in the making as Asia’s institutions seek to liberalise their investment programmes, with private equity and venture capital expected to benefit from such reforms, according to Asia Private Equity Review (APER).

• China goes green: the drive for clean air is gathering momentum in China 07 May 2008. Source: Asia Private Equity Review (APER). According to the Netherlands Environmental Assessment Agency, China had overtaken the USA as the world’s largest emitter of carbon in 2006. During those twelve months, China produced 6,200m tonnes of carbon dioxide, compared with 5,800m tonnes from the US, while Britain produced about 600m tonnes. The government of the world’s most populous nation also recognises the pressing need for clean air, as industrial growth of the country continues to accelerate. In April this year, the State Council moved to launch the largest environment fund in China, and has set the country’s clean air drive in motion.

• Test of strength: exit performance of China portfolio comes under test 16 Apr 2008. Source: Asia Private Equity Review (APER). It was a bleak first quarter for China investors. The Shanghai Composite Index has lost more than 34% of its value during the first three months of the year, its worst slump in 15 years. During the same period, Hong Kong’s Hang Seng Index also recorded a drastic slide by 17.85%. With initial public offerings and sales of shares on the public market (‘public offering route’) being the principal source of realised capital for private equity investors, the prevailing stock market condition has an immediate impact on exit performance of China portfolios, according to Asia Private Equity Review (APER).

• The power of funds 06 Feb 2008. Source: Asia Private Equity Review (APER). Direct equity funds are employed by various government units to advance their applicable goals, according to the Asia Private Equity Review (APER). A private equity fund, or direct equity investment, has become one of the most popular tools now being used by an increasing number of government units within China. For them, a pool of capital with a long-term investment horizon could help to achieve some of the tasks that require both time and monetary support.

• China's new anti-monopoly law 19 Dec 2007. Source: Johnson Stokes & Master. Hannah Ha, Martin Robertson. On 30 August 2007, China introduced a New Law, which is scheduled to commence on 1 August 2008. The New Law is China's first comprehensive competition law. It is of particular importance to private equity investors, as it may impact on their investment activities moving forward, as well as the activities of companies operating in China in which they hold an interest, says Pacific Rim law firm, Johnson Stokes & Master.

• China Quarterly Venture Capital Report 21 Nov 2007. Source: Dow Jones VentureOne and Ernst & Young. Venture capital firms invested a record amount in services-oriented companies in Mainland China during the third quarter of 2007 as overall venture investment produced 59 deals and reached $677m. This is a five per cent increase over the $645m invested in 76 deals during the same period last year, according to the China Quarterly Venture Capital Report released today by Ernst & Young and Dow Jones VentureOne, publisher of the VentureSource database.

• The Beauty of Being Quoted 14 Nov 2007. Source: Asia Private Equity Review (APER). Private equity-backed companies race to become public on various listing platforms. There has been no respite in the number of private companies seeking to become publicly-quoted stocks. Between 5th October and 2nd November, there were 11 initial public offerings in which private equity investors have had an interest, and they have successfully raised US$6 billion from the public.

• The IPO Show 17 Oct 2007. Source: Asia Private Equity Review (APER). A number of debuts drew investors’ overwhelming response There has been no end to the Greater China initial public offering (‘IPO’) stampede. The month of September continued to register investors’ feverish responses to recent listings on both the Hong Kong and Shanghai bourses.

• Opportunities arise as private equity in China evolves 10 Oct 2007. Source: Nixon Peabody. China’s economic growth has been phenomenal and this growth has made the country a magnet for investors, says Nixon Peabody. The evolution of the laws governing private investment are creating more opportunities for funds that do their homework and have the patience and flexibility to understand and work with the unique characteristics of private equity investment in China.

• Reality & Mirage 19 Sep 2007. Source: Asia Private Equity Review (APER). It was not long ago when China's A-share market was described as the world's worst performer on the global market. In a study undertaken by ABN Amro released in February 2006, it revealed China's stock market lagged behind all of its global counterparts and was the only market that recorded negative returns. It was a short page in China's A-share history. Since Beijing engaged in earnest efforts to revitalise its domestic stock market over the past year, this new direction in the pursuit of market economy bore the fruits of success.

• Private Equity Summit in Beijing: an upbeat affair, but words of caution as well 12 Sep 2007. Source: KnowledgeWharton. KnowledgeWharton looks at the state of the private equity industry in China. While investment by PE funds in China was only $11.7bn out of a global total of $738bn in 2006, in the first three months of this year Asian PE funds alone pumped in $7.6bn.

• Resolving disputes in China through arbitration (2007) 29 Aug 2007. Source: Freshfields Bruckhaus Deringer. Arbitration is usually the preferred method of dispute resolution for investors in China and this guide from Freshfields Bruckhaus Deringer aims to describe the most significant features of the arbitral process and the requirements for an arbitration clause.

• 2006 Venture capital report for the Chinese market 04 Jul 2007. Source: ChinaVenture. ChinaVenture's statistics show that the total VC investment in the Chinese market last year was US$ 2.181bn, with 63.3 per cent for the TMT industry. Among the 99 VC/PE-backed exit deals, the exit type for 33 per cent of the deals was overseas IPO. There were 41 newly raised funds in the Chinese VC market with a total financing of US$ 4.443bn.

• Chinese clean energy development to beat targets 23 May 2007. Source: New Energy Finance. New Energy Finance forecasts that China’s clean energy industry will outstrip even the ambitious targets being set by the country’s National Development and Reform Commission (NDRC). Renewable energy will supply up to 19.0 per cent of the country’s needs by 2020, but will require total investment of $267bn - around 50 per cent more than forecast by the NDRC.

• Focus and actions 18 Apr 2007. Source: Asia Private Equity Review (APER). Investors are flocking to Greater China, but with a clear investment focus, says the Asia Private Equity Review. The Greater China region, which has all the credentials to win foreign investors’ capital, witnessed vibrant investment activities during the few weeks leading up to the end of 2006. An unprecedented number of transactions were consummated in companies based in both the People’s Republic of China, as well as Taiwan. But investors were clear in choosing the preferred industrial sectors to which they preferred to commit funds. While they were prepared to inject capital into an array of industrial sectors in the PRC, financial investors are keen on Taiwan’s banking and finance activities.

• A crucible of competition: the emerging Chinese company 18 Apr 2007. Source: Knowledge Wharton. It's hard to believe today, says Knowledge Wharton, but private companies are still a relatively new phenomenon in modern China. In 1988, the Chinese government began breaking up state-owned enterprises into individually directed, but still largely state owned, companies. At around the same time, some private companies began to form, but only in 1993 did the government pass its first comprehensive law permitting private enterprise.

• One billion, three hundred million: the new Chinese consumer 04 Apr 2007. Source: Knowledge Wharton. One billion, three hundred million customers, says Knowledge Wharton, It's a number that has captured the attention of every company in the world that wants to do business in China, hoping to market everything from toothpaste to financial services to luxury cars.

• Buying spree 28 Mar 2007. Source: Asia Private Equity Review (APER). A surge of buy-out activities are taking place in China, says the Asia Private Equity Review. The recent spate of buy-out commitments is not only unprecedented, but is also a clear statement from foreign investors that their investment activities are in not anyway being impeded by the recently-implemented mergers and acquisitions rules.

• UK spends $35bn on Chinese M&A take-away 22 Mar 2007. Source: Grant Thornton Corporate Finance. Over 250 Chinese companies worth in excess of $14 billion have been bought by foreign acquirers over the past year, with Hong Kong, the United States, Singapore and the UK leading the way in establishing a foothold in China's rapidly-expanding economy. However, the rate of increase in terms of inward M&A investment into China appears to be static, with regulatory and often cultural issues still proving major hurdles, according to new research carried out by Grant Thornton Corporate Finance.