Private Equity Firms Speed Up Investments In China

Chinese venture and private equity firms executed a total of 89 investments during the fourth quarter of 2013, making it the most active quarter since the third quarter of 2011, according to a release by the Emerging Markets Private Equity Association (EMPEA).

Chinese early-stage and growth equity investors sped up investments toward the end of 2013 despite the country’s IPO market being closed for the whole year.

China also recorded the largest private equity deal in 2013 among all emerging markets. Focus Media‘s US$1.1 billion privatization by the company’s chairman and CEO Jason Nanchun Jiang, together with the Carlyle Group, CITIC Capital Partners and FountainVest Partners, tops all recorded emerging market deals by deal value.

But overall investment activity declined across all emerging markets. A total of 883 deals invested an aggregate of US$24 billion in 2013, a 7% drop in terms of capital deployed compared with 2012.

Consistent with an overall difficult fundraising market globally, emerging market fundraising also showed sluggishness. About 150 funds raised a combined US$36 billion in 2013, a 19% decline year-on-year in terms of capital raised.

"Fundraising in private equity follows a cyclical pattern and we are still in a downturn phase of the cycle," says Robert van Zwieten, president and CEO of EMPEA.

Venture capital investment accounted for 43% of all deal activities in emerging markets. That is up from 17% in 2009.

Among all venture capital deals, Asia took the dominate share and accounted for 78% of all venture deals, according to the EMPEA report.

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