Mainland remains popular with PE, VC firms

Updated: 2012-02-07 09:49

By Cai Xiao (China Daily)

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BEIJING - Though the Chinese venture capital (VC) and private equity (PE) industries are undergoing adjustments after a phase of rapid development, many global investment institutions are choosing China as a major investment destination for their new funds.

Last month, six Chinese and foreign funds finished new rounds of financing. Five of them announced plans to invest almost $4.3 billion in the Chinese mainland market, up 91.2 percent month-on-month, according to market researcher Zero2IPO Group.

In January, 10 funds were set up, aiming to raise $7 billion, the report said.

Temasek Holdings Pte, Singapore's state-owned investment company, set up a S$2.5-billion ($1.9 billion) fund focusing on North Asia, especially Chinese private and small- and medium-sized enterprises.

The Swiss investment company Adveq Holding AG set up a $300-million fund in January, and more than half of its funds will be invested in China.

Adveq Chairman Bruno Raschle was quoted in media reports as saying that the company would be interested in the key sectors mentioned in the 12th Five-Year Plan (2011-15), such as medicine, logistics and next-generation information technology.

Another new global fund launched in January by the US-based investment institution Vivo Venture LLC will focus on the Chinese market for medicine, vaccines, medical appliances and health.

A dollar-dominated fund of leading Chinese PE company, Hony Capital Ltd, which is focusing on cross-border acquisitions, finished a new round of fundraising of $2.37 billion.

Blackstone also finished a four-year financing programfor its sixth-stage fund, with an overall scale of $16 billion.

Antony Leung, senior managing director and chairman of The Blackstone Group Greater China, told China Daily in June that the company had a strong desire to invest more in China, but was patient. One reason was that China's economy was not short of money then and many deals' valuations were high.

But the fundraising climate in China has tightened.

According to another consultancy, ChinaVenture, 1,084 yuan-denominated PE and VC funds were launched in the past three years, but the country's investor base has shrunk over the past six months.