Private Equity Roundup — China
Q2 2012
Private equity roundup — China
Private equity roundup is a quarterly newsletter on trends and perspectives related to private equity activity in China. Contacts:
Robert Partridge Greater China Private Equity and Transaction Advisory Services Leader robert.partridge@hk.ey.com Michael Buxton Asia-Pacific Private Equity Leader michael.buxton@hk.ey.com Jeff Bunder Global Private Equity Leader jeffrey.bunder@ey.com Philip Bass Global Private Equity Markets Leader philip.bass@ey.com Peter Witte Private Equity Analyst peter.witte@ey.com
Investors increase activity in the second quarter, as deal value climbs 30% over Q1
Investors continue to be attracted to China’s long-term growth story. While global macro headwinds have impacted fund-raising and investment activity in the region, China remains one of the world’s most compelling growth stories. Strong structural underpinnings include rising per capita incomes, increased consumerism and favorable demographics. Despite a recent deceleration in China’s GDP growth rate (9.3% in 2011 to an expected 7.8% for the full-year 2012), China looks set to continue to drive above-average growth through the next decade, and astute investors are positioning themselves to be an active part of the PE landscape for years to come. In Q2, transaction activity increased nearly 30% on a value basis over Q1, with PE firms announcing deals valued at US$2.5b, an increase of US$1.9b in Q1. However, PE deal volume remains well below 2011 averages, when PE firms averaged 160 investments per quarter valued at US$5.0b. Among the reasons for the decline in activity is an overall decline in the global IPO markets and a corresponding decline in pre-IPO investments by global and local China-focused PE firms. After jumping in Q1, fund-raising declined in the second quarter. Firms focused on China closed on an aggregate US$5.5b of investor commitments in the second quarter, down 34% from the US$8.3b raised in Q1. Like the first quarter, the
Private equity roundup — China
Private equity roundup is a quarterly newsletter on trends and perspectives related to private equity activity in China. Contacts:
Robert Partridge Greater China Private Equity and Transaction Advisory Services Leader robert.partridge@hk.ey.com Michael Buxton Asia-Pacific Private Equity Leader michael.buxton@hk.ey.com Jeff Bunder Global Private Equity Leader jeffrey.bunder@ey.com Philip Bass Global Private Equity Markets Leader philip.bass@ey.com Peter Witte Private Equity Analyst peter.witte@ey.com
Investors increase activity in the second quarter, as deal value climbs 30% over Q1
Investors continue to be attracted to China’s long-term growth story. While global macro headwinds have impacted fund-raising and investment activity in the region, China remains one of the world’s most compelling growth stories. Strong structural underpinnings include rising per capita incomes, increased consumerism and favorable demographics. Despite a recent deceleration in China’s GDP growth rate (9.3% in 2011 to an expected 7.8% for the full-year 2012), China looks set to continue to drive above-average growth through the next decade, and astute investors are positioning themselves to be an active part of the PE landscape for years to come. In Q2, transaction activity increased nearly 30% on a value basis over Q1, with PE firms announcing deals valued at US$2.5b, an increase of US$1.9b in Q1. However, PE deal volume remains well below 2011 averages, when PE firms averaged 160 investments per quarter valued at US$5.0b. Among the reasons for the decline in activity is an overall decline in the global IPO markets and a corresponding decline in pre-IPO investments by global and local China-focused PE firms. After jumping in Q1, fund-raising declined in the second quarter. Firms focused on China closed on an aggregate US$5.5b of investor commitments in the second quarter, down 34% from the US$8.3b raised in Q1. Like the first quarter, the