China PE Speech UIBE SCTU Seminar 2007-05-24.pptVIP

Private Equity in the PRC: Regulatory and Operational Issues For South China Technology University Robert M. Xie 谢 岷 Horizons Ventures Limited 维港投资集团有限公司 xie.robert@ May 2007 Contents Market Overview China Domestic Private Equity Hot PE Issues in China Understanding PE Fund Management PE Investment Strategies Risk Management Appendix: Selected Sample Transactions Market Overview Private equity, global force for change, comes to Asia “For more than two decades, buyout funds - or non-venture private equity funds - have been an important force for global corporate finance and restructuring. Top-quartile funds, in particular, have turned in consistently strong performances, generating attractive returns for their investors. In the 1980s the sector led a revolution in value creation and corporate restructuring that continues to reenergize economies in the developed, and increasingly, the developing world. Viewed from corporate suites, buyout players have alternatively been willing acquirers of underperforming businesses, formidable competitors, and, under the right circumstances, valued partners…” McKinsey on Finance, Number 12, Summer 2004 VC rises to levels not seen since dotcom bubble The volume of money invested globally in venture capital is set to top $32bn in 2006, more than has been seen for 4 years (Ernst Young), of which Global investments in venture capital targets - normally defined as companies up to 10 years old - reached $30.9bn; up from $29bn in 2004, $27bn in 2003, and $28.6bn in 2002. As in the dotcom bubble of 2001, when venture capital investment reached $51.2bn, much of the focus in 2006 has been on technology companies. Biotechnology and internet and other computer-based technology, reducing burning of fossil fuels. 56% of VC invested was in IT companies; 29.5% devoted to healthcare companies. There were 56 European venture-backed IPO in the 1st three quarters of 2006. The addition of 4th-quarter IPOs means 2006 will have seen more flo