China’s Private Equity Market Set For Slower Growth This Year

SHANGHAI, CHINA – After a robust 2014, China’s private equity market is forecast to grow at a slower pace this year, a report by Bain & Co showed.

The industry report said it will be difficult for PE investors in China to maintain the momentum for the rest of the year due to various factors, including fierce competition and economic slowdown.

In 2014, PE investors in China invested in USD451bn worth of deals, a 173 percent year on year.

The number of deals surged to 350, exceeding the market’s five-year average by 30 percent, the report said. The value of funds that exited also tripled from a year earlier to US$61 billion.

China's renminbi
China’s renminbi

The strong performance was driven by mega transactions in the Internet and technology sectors, which accounted for 40 percent of the total deal value, the consulting firm said.

However, this year will be a different story.

Bain’s PE Practice leader Kiki Yang said China’s slower economic growth and stiff competition will make it harder to generate high returns in the future.

Last January, 25 China-focused private equity and venture capital funds raised an aggregated US$1.2 billion, an industry report said.

However, the proceeds raised plunged by 79.7 percent from December and tumbled 72.1 percent from a year earlier, said a report released by Zero2IPO Research.

Of the 25 funds, 23 were yuan-denominated funds which raised US$787 million, or 65.6 percent of the total proceeds, data showed.

Capital raised by 14 growth funds totaled US$635 million, accounting for 52.9 percent of the total, followed by US$394 million raised by five seed funds and US$140 million garnered by five merger and acquisition funds. – BusinessNewsAsia.com

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