-- Fund-raising & exit activities are active
-- Released by Zero2IPO Research Center
SHANGHAI, China, Dec. 6 /Xinhua-PRNewswire/ -- Zero2IPO Research Center -- the research arm of Zero2IPO Group -- successfully completed survey on the Chinese private equity market. With participation of 75 private equity funds, the survey disclosed that 58 newly-raised funds targeting Asia, including Chinese mainland, collectively raised US$30.38 billion as of November 30, 2007. The total funds raised during the first 11 months of 2007 rose by 114.0% when compared to 2006.
One hundred-seventy Chinese enterprises received US$12.49B from 105 PE funds. These statistics and data show that China is the most active PE market in Asia. Zero2IPO Research Center estimates that PE investment on Chinese market accounts for 1.5% of the 2007 global total.
The current excess liquidity on Asian market -- especially on fast growing Chinese market -- indicates that Chinese PE market presents more and more attractions towards global capital.
PE funds rapidly raise more capital with real estate funds in spotlight
The 58 new funds raised US$30.38 billion, up by 114.0% than 2006 in terms of amount raised. Fourteen buyout funds raised US$13.67 billion, representing 45.0% of the total newly raised capital; 24 growth capital funds raised US$7.66 billion, accounting for 25.2% of the total. Eight real estate-focused funds raised US$5.05 billion. Through this survey, we find that some international capitals shifted part of businesses to fast-growing Asian real estate market from low performing US real estate market to diversify risks.
Figure 1 (Please Click the Link in the bottom of the page) Total amount raised & no. of newly raised funds by quarter from 2006 to November 2007
Figure 2 (Please Click the Link in the bottom of the page) Fund no. and amt. raised of assorted PE funds in first 11 months of 2007 (US$M)
Local & foreign PE funds co-existed as cooperator and competitor, and making more deals
One hundred and seventy Chinese enterprises secured PE investments from nearly 100 local and foreign private equity funds. There were 41 more than that of PE-backed companies in 2006. Data show that apart from active foreign PE funds, more and more foreign capital funds conducted PE investment in China. Another highlight is Chinese local PE funds become competitive. It can be predicted that Chinese PE market will become more active in the context of cooperation and competition between the local and foreign PE funds.
Figure 3 (Please Click the Link in the bottom of the page) Overall investment by quarter from 2006 to November 2007
Traditional industry saw its weight continuously increasing; Services saw amount invested decreasing
In terms of industrial distribution, traditional industry gained weight continuously. In first 11 months of 2007, a total of 86 traditional enterprises secured US$8.97 billion PE investment representing 71.8% of the total. This proportion was increased by 21.6 percent when compared with the traditional overall investment ratio in the total 2006 investment volume. During the same timeframe, a total of US$1.44 billion was injected in services industry, 69.1% down compared with 2006.
The services’ overall investment volume ratio in the total investment volume of first 11 months was reduced by 24.5% compared to 2006. According to Zero2IPO Research Center, there were several mega PE investments in financial services sector -- especially in Chinese banking sector during 2006. Those mega deals were contributable to the high amount invested in 2006, and we believe it is almost impossible to transcend the 2006 investment level in services industry in coming years. The PE funds invested US$978.97 million in 22 broad IT enterprises in first 11 months. This indicates that the broad IT industry gradually will become another hot investment industry after the traditional and services industries. The PE funds will directly compete against VC funds in investing in broad IT sector.
Figure 4 (Please Click the Link in the bottom of the page) Industrial distribution of PE investments from 2006 to November 2007 by deal no.
Figure 5 (Please Click the Link in the bottom of the page) Industrial distribution of PE investments from 2006 to November 2007 by amount invested (US$M)
Growth capital was still active; Bridge capital performed well
By investment strategy, the growth capital funds invested in 91 enterprises representing the lion’s share (i.e. 53.5%) of all the deals closed in first 11 months of 2007. In the context of more enterprises listed in 2007, the bridge capital funds provided loan or conducted equity investment in 20 pre-IPO enterprises in China, increasing by 82.8% compared to the number of PE investments in the form of bridge capital in 2006. In terms of amount invested, those 20 pre-IPO enterprises received US$2 billion and averaged US$100 million. A total of 21 listed companies (listed in capital markets of China Mainland, Hong Kong and United States of America) received US$2.06 billion PIPE investment, two more in deal number - but with a slight decrease in amount invested compared with 2006. The PE funds invested US$1.85 billion in 18 real estate projects, performing less well than 2006 investment volume.
Figure 6 (Please Click the Link in the bottom of the page) Investment strategy distribution of PE funds by deal no.
Figure 7 (Please Click the Link in the bottom of the page) Investment strategy distribution of PE Funds by amt. invested (US$M)
Exits generated high returns for PE funds with IPO still as primary option
The 2007 exit activity was quite lively - much better than 2006. There were 85 exit events during the first 11 months of 2007 within our survey scope. IPO is still a primary exit option. In all, there were 68 IPO events. Other exits include 11 secondary offers on secondary markets, five trade sales and one acquisition among the enterprises.
Table 1 (Please Click the Link in the bottom of the page) Partial PE-backed IPOs in first 11 months of 2007
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http://www.zero2ipo.com.hk/china_this_week/detail.asp?id=5423
About Zero2IPO Research Center
Established in Nov. 2001, Zero2IPO Research Center aims to provide professional research reports and custom researches for relevant professionals in the Greater China Region. Our research ranges from venture capital, private equity, IPO, M&A to TMT industries. Currently, Zero2IPO Research Center has become the most prestigious research institute in China VC and PE field.
In addition, the Research Center launched the first online database in China -- Zero2IPO-China VentureDatabase in December 2007, collecting the latest, in-depth and all-around data, covering China VC, PE, M&A, and IPO fields to satisfy the needs of the profession.