China. AVCJ private equity and venture capital report. 14 th annual edition

Transcription

1 China 2018 AVCJ private equity and venture capital report 14 th annual edition

2 CONTENTS 1 Introduction 4 Keeping up the Good Work 2 Assets Under Management and M&A 6 Ample Assets, M&A Marginally Changed 3 Fundraising 11 Fundraising Falters 4 Investments 17 Investment In Sight of the Next Milestone 5 The Exit Environment 23 IPOs Ignite 6 Leading Players 29 Looming Leaders 7 Looking Ahead 34 The Great Wall of Money II

3 Assets under management and M&A Ample assets, M&A marginally changed Private equity capital under management in China in 2017 continued its steady rise to just over $ billion, a 16.5% increase on 2016 s almost $355 billion. The over $95.7 billion of private equity capital invested during 2017 reached 0.8% of China s almost $11.94 trillion GDP, up from 0.59% of just over $11.2 trillion in China - Gross Domestic Product vs. Private Equity Investment US$billion Gross Domestic Product (GDP) % of PEI over GDP *GDP data refers to fiscal year (April 1-March31) and Private Equity Investment data refers to year-ended on December 31 Source: International Monetary Fund AVCJ Research The two metropolitan centres slightly extended their dominance of private equity investment in China by region during Beijing went from almost $31.3 billion invested in 2016, or 47.3% of that year s total, in 647 deals, 475 disclosed, to just short of $49 billion, or 51.1% of the year s total, in 2017, from 585 investments, 405 disclosed. Shanghai rose proportionately even further, from just over $7.2 billion invested in 2016, or 10.9% of the year s total, in 316 transactions, 226 disclosed, to over $16.34 billion, or 17.1% of the 2017 total, from 357 deals, 247 disclosed. Tianjin finally began to show evidence of the massive government-backed development program there, rising from just under $1.35 billion, or 2% of total investment in 2016, III

4 Fundraising Fundraising falters Total Private Equity Funds Raised Total private equity funds raised for China in 2017 amounted to just over $56 billion, comparable with levels in 2015 but 45.8% down on 2016 s almost $103.5 billion. However, Chinese private equity fundraising also tilted more towards RMB funds than in the previous year, with only 9.5% of the capital raised for China denominated in US dollars in 2017, versus 17.1% in US dollar fundraising for China, in fact, amounted to only just over $5.3 billion in 2017, versus almost $17.7 billion in China Asia Unsurprisingly in the light of these figures, domestic Chinese vehicles dominated the fundraising landscape. Largest fund close of the year by amount raised was the State-Owned Enterprises China Innovation Fund, which secured just over $16.5 billion in its first close, against a target of just over $21.7 billion. Second largest close was the just over $7.23 billion first close of NPL/special situations vehicle the Reform Central Enterprise Operation Investment Fund, which targets just under $21.7 billion. And third largest was the just under $2.9 billion first close of FoF the Tianjin Haihe Industry Fund, which targets just under $14.5 billion. Those first two funds are also the top two in the China market by target size, with the China Forestry Strategic Emerging Industry Development Fund third with a target of just over $14.68 billion, and no close recorded to date. IV

5 The exit environment IPOs ignite China - Private Equity-backed Exits For Private Equity China s strong year for investments in 2017 was balanced by a not-so outstanding year for exits. Private equity-backed exit transactions were down 33.2%, in fact, from almost $26.8 billion in 2016, realized through 138 deals, 121 disclosed, to just under $17.9 billion, from 139 deals, 131 disclosed. Private equity-backed IPOs, however, showed a far more positive trend, up 43.3% from $20.5 billion from 135 listings in 2016, to $29.3 billion in value from 283 private equity-backed flotations. Amount No. of Deals China - Private Equity-backed IPOs Funds Raised No. of IPOs V