Chinas PE Market Delivered Recordbreaking Numbers of Both New FundsInvestment Deals.docx

1、Chinas PE Market Delivered Recordbreaking Numbers of Both New Funds Investment DealsChinas PE Market Delivered Record-breaking Numbers of Both New Funds & Investment Deals Zero2IPO Research CenterDecember 8, 2010Chinas PE market delivered the aggressive rebound after the plunge in 2009, as China eco

2、nomy maintained its better performance worldwide, in accordance with the statistics of January-November 2010 recently released by Zero2IPO, a famous VC and PE research, consultation and investment institution in the Greater China region. 74 PE funds available for investment in Chinese Mainland compl

3、eted their raising during the first 11 months 2010, a four-year high in terms of number of new funds, raising a total of US$26.41B, 2.04 times of that raised during the full year 2009. In reference to the investment activity continuing to gain momentum, 307 enterprises had garnered PE investments up

4、 to November 30, disclosing a total investment amount of US$9.32B, and bio/health ranked the top attractive industry by an astonishing margin. As for exit, 2010 continued its soaring tendency in the end of year, as the first 11 months closed 138 exits, including 61 exits in October and November, and

5、 IPO remained the major exit option. Enthusiastic PE fundraising accompanied with decreasing scale of single fundThe first 11 months in 2010 closed 74 PE funds available for investment in Chinese Mainland, with a total fundraising amount of US$26.41B. Despite increase in both the number of new funds

6、 and fundraising amount, the scale of single fund has successively decreased since 2007, and the average fundraising amount was only US$356.87M this year. Furthermore, according to the observation by Zero2IPO Research Center, the number of funds scaled below US$100.00M rose persistently since 2008,

7、while that above US$1.00B kept decreasing, therefore, the 2010 witnessed more obvious tendency of decreasing fundraising scale. 40 out of 74 funds raised during the first 11 months were scaled under US$100.00M, with a total fundraising amount of merely US$1.48B. In addition, Zero2IPO Research Center

8、 initiated the statistics on newly-established funds in Chinas PE market since 2010. As of November 30, 2010, a total of 30 newly-established funds launched their raising, with the target fundraising scale up to US$12.13B. The first 11 months witnessed more growth funds among the 74 funds, totaling

9、60 growth funds with US$10.46B raised. Despite only four funds raised, buyout funds boasted relatively higher scale, with a fundraising amount accounting for 53.3% of the total. Meanwhile, ten real estate funds aggregately raised US$1.86B since 2010, 5.0 and 3.40 times of these in 2009 in terms of n

10、umber of funds and fundraising amount. Zero2IPO Research Center noticed that as China government tightened control on the real estate sector, some rich individuals had injected their capitals into the real estate industry via PE funds, with a view to evading policy restriction on investment. Though

11、such funds render channels for individual investors to participate in real estate investment, the risk disclosure to investors has yet to be improved, according to Zero2IPO Research Center. With increasing enthusiasm of foreign PE institutions in raising RMB funds and slowing pace in raising foreign

12、 currency funds, RMB funds have further extended its lead over foreign currency funds in terms of number of new funds. 64 out of 74 funds raised were RMB denominated, 3.05 times of that during the full year 2009, up merely 14.2% from 2009 in terms of fundraising amount. There were only 10 foreign cu

13、rrency funds completing fundraising with a total amount accounting for 62.3%, due to large-scale buyout funds and growth funds. Enthusiastic investment activity but more small-scale investmentsIn terms of investment, out of 307 Chinese enterprises invested by PE funds during the first 11 months of 2

14、010, 263 deals disclosed a total investment amount of US$9.32B, up 162.4% and 7.7% from 2009 regarding the number of deals and investment amount. Though the number of invested enterprises broke the four-year record, the investment amount of a single deal hit a four-year low with an average investmen

15、t amount of US$35.43M disclosed by 263 deals. In reference to the investment strategy, PE adopted more diversified investment strategy in 2010, seeing substantial increases in investment deals via those strategies except growth capital. 276 of 307 investment deals were via growth capital, a notable

16、increase from 82 deals in 2009. There were 15 PIPE (Private Investment in Public Equity) deals, on a par with that in 2009; four investment deals were closed via M&A, a slight drop from the six deals in the previous year; in addition, there were ten real estate and two restructuring investment deals

17、, both outperforming the previous year. Bio/healthcare took the lead, Internet better-received by PE institutions In terms of industry breakdown of PE investments, the investment deals during the first 11 months were distributed in 21 industries. To be specific, as hi-tech industries were the best r

18、eceived fields, the bio/healthcare and clean-tech under the emerging sectors were focused by investment institutions. Excluding a few leading enterprises secured large-scale investments, nearly 70% of investees each obtained less than US$20.00M. By contrast, those developed traditional sectors, i.e.

19、 agr/forestry/fishing, food & drinks, chain retail and machinery manufacturing, had relatively larger investment amount for a single deal. Furthermore, it is noteworthy that the internet industry poorly received by PE investors witnessed significant improvements in both number of deals and investmen

20、t amount this year. E-commerce and internet service under the industry garnered main investments, and enterprises obtaining larger-scaled investments mostly boasted fully-fledged business models and stable growth through the industry reshuffling. Beijing saw more investment deals, central region ran

21、ked higher overall The 307 investment deals closed during the first 11 months were scattered mainly in 29 provinces and cities. Specifically, Beijing, Shanghai and Jiangsu maintained the lead in number of investment deals, and ranked among the top five in terms of investment amount. Shanxi ranked se

22、cond, a marked improvement in terms of investment amount, mainly due to BOC Internationals investment in Jinyulu Railway Channel. Generally, Chinas central and western regions outperformed the historical standard, including Sichuan, Henan, Hunan, Hubei and Anhui, posting considerable increases in te

23、rms of number of deals and investment amount. IPO exit continued its predominance, machinery manufacturing topped the list of exitChinas PE market had shown significant improvement in exit since 2010. 138 exits had been completed by PE institutions up to November 30, including 133 IPO-backed exits a

24、nd 5 exits via trade sale. In terms of institution type, 64 out of 133 exits were completed by domestic institutions, 68 by foreign institutions and six by Sino-foreign joint ventures. In terms of industry breakdown, the machinery manufacturing held a safe lead over its follower, the bio/healthcare,

25、 with 23 exits, for instance, the listed NVC Lighting Holding Limited, Zhengzhou Coal Mining machinery Group and Mingyang Wind Power are backed by PE institutions. The bio/healthcare delivered 16 exits, involving 14 invested enterprises, which are mainly distributed in two sub-industries, pharmaceut

26、icals and health products. The food & drinks ranked third, and it is common that multiple institutions input capitals in an enterprise and withdraw from it, for instance, China Minzhong Food Corporation Limited, China New Borun Corporation, Global Dairy, Guangdong Yashili Group and Modern Farming Gr

27、oup received capital from a number of PE institutions before their IPOs. As for market breakdown of exits, HKMB remained the major market for IPO-backed exits, while domestic markets delivered outstanding performance after IPO restart and launch of ChiNext, completing 50 exits via domestics IPO during the first 11 months, a 37.6% of the total. The year 2010 saw slight increase in exits by foreign institutions via domestic IPO, registering five foreign institutions, i.e. Goldman Sachs and Carlyle.