Western valuation criteria cannot be applied to Chinese PE - study

The study, which was based on interviews conducted with European investors and Chinese managers of private equity and venture capital funds, was presented at the German Equity Forum in Frankfurt on Monday. 

"PE and VC investors have also adapted the sectoral focus to the changed macroeconomic conditions in recent years," said Volker Potthoff of CMS Hasche Sigle. "They now focus less on export-dependent sectors and much more on those geared to China's domestic market, for example in the consumer goods industry or the healthcare market."

The findings indicate that the general conditions for Chinese private sector investments have changed as growth becomes less dynamic. PE and VC investors are increasingly cautious, particularly in valuing target companies. Moreover, consolidation in the sector is expected in the medium term.

"We hope that our study helps to create more transparency and better understanding of the Chinese PE and VC sector," said Alexander von Preysing, head of issuer services at Deutsche Börse. "The study findings also result from our China-Europe Private Equity Roundtable, with which we have established a well-functioning think-tank network of Chinese and European investors and fund managers."

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