• Home
  • News
  • Analysis
  •  
    Regions
    • Australasia
    • Southeast Asia
    • Greater China
    • North Asia
    • South Asia
    • North America
    • Europe
    • Central Asia
    • MENA
  •  
    Funds
    • LPs
    • Buyout
    • Growth
    • Venture
    • Renminbi
    • Secondary
    • Credit/Special Situations
    • Infrastructure
    • Real Estate
  •  
    Investments
    • Buyout
    • Growth
    • Early stage
    • PIPE
    • Credit
  •  
    Exits
    • IPO
    • Open market
    • Trade sale
    • Buyback
  •  
    Sectors
    • Consumer
    • Financials
    • Healthcare
    • Industrials
    • Infrastructure
    • Media
    • Technology
    • Real Estate
  • Events
  • Chinese edition
  • Data & Research
  • Weekly Digest
  • Newsletters
  • Sign in
  • Events
  • Sign in
    • You are currently accessing unquote.com via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0)870 240 8859

      Email: customerservices@incisivemedia.com

      • Sign in
     
      • Saved articles
      • Newsletters
      • Account details
      • Contact support
      • Sign out
     
  • Follow us
    • RSS
    • Twitter
    • LinkedIn
    • Newsletters
  • Free Trial
  • Subscribe
  • Weekly Digest
  • Chinese edition
  • Data & Research
    • Latest Data & Research
      2023-china-216x305
      Regional Reports

      The reports review the year's local private equity and venture capital activity and are filled with up-to-date data and intelligence on fundraising, investments, exits and M&A. The regional reports also feature information on key companies.

      Read more
      2016-pevc-cover
      Industry Review

      Asian Private Equity and Venture Capital Review provides an independent overview of the private equity, venture capital and M&A activities in the Asia region. It delivers insights on investments made, capital raised, sector specific figures and more.

      Read more
      AVCJ Database

      AVCJ Database is the ultimate link between Asian dealmakers and those who provide advisory, financial, legal and technological services to the private equity, venture capital and M&A industries. It is packed with facts and figures on more than 153,000 companies and almost 117,000 transactions.

      Read more
AVCJ
AVCJ
  • Home
  • News
  • Analysis
  • Regions
  • Funds
  • Investments
  • Exits
  • Sectors
  • You are currently accessing unquote.com via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0)870 240 8859

    Email: customerservices@incisivemedia.com

    • Sign in
 
    • Saved articles
    • Newsletters
    • Account details
    • Contact support
    • Sign out
 
AVCJ
  • Greater China

Investors cautiously optimistic on China buyouts - AVCJ Forum

avcj-hong-kong-2019-china
  • Larissa Ku
  • 14 November 2019
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Save this article  
  • Send to  

The emergence of willing sellers, a pullback in competition from strategic investors, and greater availability of leveraged financing are contributing to more buyout deal flow in China.

"The market is emerging in China, I wouldn't say it is mature," Frank Tang, chairman and CEO of FountainVest Partners, told the AVCJ Forum. "Most entrepreneurs are healthy and young, so for generational succession we are only seeing the tip of the iceberg. When that comes it will be a huge wave."

This potential is evident in the Blackstone Group's portfolio. The firm has bought two businesses from Chinese entrepreneurs in recent years - one of the founders was in his 80s and the other in his 70s.

Edward Huang, head of private equity for Greater China and Korea at Blackstone, observed that succession is often one of several challenges companies are facing. They are also becoming more global, larger in size, and more operationally complex - and they need systems and talent to manage this development. "Some of them haven't been great about hiring professional management," Huang said. "Those are things that we do really well."

Further control opportunities are coming as the founders of Chinese companies listed in the US explore privatizations in partnership with PE partners and as foreign multinationals exit the China market. There are already numerous examples of each from Focus Media and Feihe International to Metro and McDonald's.

“The China business environment is changing really fast and some multinationals cannot keep up with this trend," said Michael Chen, a director at Centurium Capital. "[In addition] multiple layers of reporting systems make the decision-making process really long, so some companies just choose to exit China."

Slower growth, increasing operational complexity and intensifying local competition are also dissuading foreign strategic investors from trying to enter the China market. As such, private equity players can have a clearer run at some deals.

“Strategic capital is not as intense as it was a few years ago. There was a wave where multinationals were very, very intense competitors for assets in China and domestic strategics were getting access to us dollars," said Blackstone's Huang. "In today's market, some of those other sources of capital are not as aggressive as they were in the past.”

Another favorable development for private equity is readily available transaction financing. FountainVest participated in a consortium that privatized US-listed Chinese outdoor advertising business Focus Media in 2013. The deal was supported by debt financing at 2.6x EBITDA sourced from nine banks.

Now, debt-to-EBITDA multiples of 5-6x are routine and covenant-lite loans of five years to seven years are available, said Tang. Chinese banks are also aggressively pursuing financing mandates, having developed the requisite capabilities. "Today, the Chinese banks would be our first call for a take-private," Tang added.

 

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Google plus  
  • Save this article  
  • Send to  
  • Topics
  • Greater China
  • Buyouts
  • Fountainvest Partners
  • The Blackstone Group
  • Centurium Capital
  • AVCJ Events
  • China

More on Greater China

hkma-yichen-zhang
Lower valuations, less leverage could drive China PE returns - HKMA Forum
  • Greater China
  • 09 Nov 2023
power-grid-electricity-energy
Energy transition: Getting comfortable
  • Australasia
  • 08 Nov 2023
jean-eric-salata-baring-2019
Q&A: BPEA EQT’s Jean Eric Salata
  • GPs
  • 08 Nov 2023
airport-travel
Asia’s LP landscape: North to south
  • LPs
  • 08 Nov 2023

Latest News

world-hands-globe-climate-esg
Asian GPs slow implementation of ESG policies - survey

Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...

  • GPs
  • 10 November 2023
housing-house-home-mortgage
Singapore fintech start-up LXA gets $10m seed round

New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.

  • Southeast Asia
  • 10 November 2023
india-rupee-money-nbfc
India's InCred announces $60m round, claims unicorn status

Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”

  • South Asia
  • 10 November 2023
roller-mark-luke-finn
Insight leads $50m round for Australia's Roller

Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.

  • Australasia
  • 10 November 2023
Back to Top
  • About AVCJ
  • Advertise
  • Contacts
  • About ION Analytics
  • Terms of use
  • Privacy policy
  • Group disclaimer
  • RSS
  • Twitter
  • LinkedIn
  • Newsletters

© Merger Market

© Mergermarket Limited, 10 Queen Street Place, London EC4R 1BE - Company registration number 03879547

Digital publisher of the year 2010 & 2013

Digital publisher of the year 2010 & 2013