- China Business Blog - http://www.chinabusinessservices.com -

Profiting from Private Equity

While foreign investment is still flooding into China at a rate of over US$1 billion a week (see here [1]), there is increasing activity on the private equity front – it is estimated that over US$6 billion in private equity may flow into China this year, up from US$3 billion in 2005, and just US$1.25 billion in 2004.

A Bloomberg report notes:

The report also notes that China accounted for 22 percent of private-equity investment in Asia in 2005, and that the number of completed deals rose to 90 from 1994’s 68. Recent action has included the listing of two of 3i’s seven China ventures – fire alarm maker GST Holdings (Hong Kong, June); and the advertising group Focus Media – known to anyone that has stood in a lift in China in recent times!- (Nasdaq, July).

Show me the money!? Bloomberg, referring to a research from The Centre for Asia Private Equity Research notes: “a survey of 45 exits last year showed 44 percent of them had an internal rate of return of more than 200 percent”.

While the market has obviously come a long way from the days of “Mr. China” But the market is not without problems – political as well as commercial – and Carlyle’s experience with its (still un-approved) US$375 million deal for 85 percent of Xugong Construction Machinery is a case in point. See our recent posts here [2] and here [3].

However, with the growth in private enterprise, a lack of bank finance, a fast-growing domestic market, and better exist options, there are plenty of opportunities for investors.

China Business Services provides a range of services to investors in China, and has information about a number of Chinese businesses seeking capital. Please contact us if you would like to discuss investment issues.
See news source:

Tags: China Business Blog [5]; China Business Services [6]; China [6]; Jeremy Gordon [7]