Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Introduction
Four words best describe the changes in China's
private equity industry over the last decade:
perpetual, dramatic, disruptive, unpredictable. A
decade ago, China was a private equity backwater,
with a handful of firms and few success stories.
Things really began to heat up in 2005 when
Chinas largest internet search company Baidu
went public on NASDAQ. Its share price tripled on
the opening day, creating paper fortunes for
Google, which owned a minority stake, as well as
several US venture capital firms that invested
years earlier in Baidu.
The race was on. Giants of Silicon Valleys venture
capital industry, including Sequoia Capital and
Kleiner Perkins, opened offices in China, along with
a growing number of well-established international
private equity firms. Everyone seemed to want in.
Capital raised to invest in China PE deals grew at
least five-fold from 2005 to a total of over $100bn.
IPO exits went from few to over 300 in some years.
The number of active PE firms went from a few
dozen investing only dollars to over 1,000,
including hundreds of newly-organized funds
investing Renminbi.
If the ride up was fast, the slide down was even
quicker. By early 2013, most exits had ceased and
with it new capital-raising. PE firms' portfolios
ended up struggling under the collective weight of
over 7,000 unexited PE investments. With fund
lives growing shorter and profit distributions to
Limited Partners few and far between, China
private equity turned from one of the most
dynamic and attractive investment classes in the
world to one of the more troubled.
In 2014, there are signs that the worst may now
be over, that China PE is pulling out of a tailspin.
It's impossible to quantify how big the losses for
LPs may run, how many of these newly-established
PE firms will close up shop, when this once-
booming and supremely promising industry will
recover its lost luster. China private equity is
entering a period of retrenchment and maturation.
IPOs have now returned, and with it, the likelihood
that more China PE deals will achieve successful
exit. But, going forward, the PE industry in China
will need to make greater use of all other exit
channels as well.
Private equity has been a powerful force for good
in China. Entrepreneurs, consumers, investors
have all benefitted enormously. Profit opportunities
for GPs and LPs remain large. Great companies in
need of capital abound.