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Private equity investors are more confident about China deals

By Fei Ya (China Daily)
Updated: 2009-10-19 08:55

Rapid growth

Chris Cooper, head of private equity for Deloitte Northern China, said the PE market in China has been growing rapidly in deal numbers, deal size and also the variety of players.

"The majority of survey respondents expect domestic equity investors to assume a dominant role in domestic acquisitions," Cooper said.

"But along with this trend, we are already seeing more shared, cooperative investments that benefit from the synergies of foreign and domestic skill sets," he said.

The survey group interviewed approximately 30 leading PE investors in China across all sectors of PE fund types between August and September, collecting market views on the development of the China PE market over the next 12 months.

Highlights

Here are the highlights of survey results:

*Increasing appeal of PE: A majority (97 percent) of respondents expected the overall level of investment activity to increase or stay the same.

Related readings:  PE firms follow a new rulebook  PE funds shop other sectors  China to boost share in PE pie  GEB set to become hotbed for billionaires

*Type of investor: In a change from last year, 50 percent of respondents believed that the most active PE investors will be domestic PE fund managers, with the majority of the respondents indicating that domestic funds will increasingly win deal market share from foreign funds.

*Increase in returns: Thirty-nine percent of respondents expected the return on investment for PE firms to increase. They cited issues ranging from market improvement to an increase in IRR measures.

*Growing competition: Seventy-one percent of respondents expected competition in the PE market to intensify, largely driven by an increase in the number of RMB funds and local players.

*Average deal sizes: Fifty-seven percent of respondents expected deal size to stay the same, primarily due to the nature of the China PE market, which is primarily growth capital-oriented with consistent deal sizes.

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