China’s VC, PE funds key to new tech

Zero2IPO chief says firms have more than $1.02 tril­lion un­der man­age­ment

China Daily (Hong Kong) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

Chi­nese ven­ture cap­i­tal and pri­vate eq­uity firms have as­sets to­tal­ing more than 7 tril­lion yuan ($1.02 tril­lion) un­der man­age­ment this year, and the amount will ex­ceed 10 tril­lion yuan in 2020, ac­cord­ing to the chief of Zero2IPO Group.

There are been more than 10,000 ven­ture cap­i­tal and pri­vate eq­uity firms in China with as­sets to­tal­ing more than 7 tril­lion yuan, said Ni Zheng­dong, chair­man of lead­ing ven­ture cap­i­tal and pri­vate eq­uity re­search com­pany Zero2IPO.

“Al­though some peo­ple say that China’s VC and PE mar­ket is fac­ing a chal­lenge of cap­i­tal short­age, data shows this is not true,” said Ni.

Ac­cord­ing to Zero2IPO, there were 2,191 new funds fi­nanc­ing 1.2 tril­lion yuan in the first 11 months, and yuan­dom­i­nated funds have be­come the main force, with their num­ber to­tal­ing 2,092 and funds fi­nanc­ing 985.3 bil­lion yuan.

“I be­lieve Chi­nese ven­ture cap­i­tal and pri­vate eq­uity in­sti­tu­tions will man­age more than 10 tril­lion yuan in 2020. In­no­va­tion, en­trepre- neur­ship and eq­uity in­vest­ment will play an im­por­tant role in China’s new econ­omy,” said Ni.

Ying Wenlu, chair­man of Nan­jing-based Ad­dor Cap­i­tal, said China’s VC and PE mar­ket is not short of money, but this is be­ing at­tracted to ex­cel­lent VC and PE in­sti­tu­tions.

“In the United States, 10 per­cent of VC and PE in­sti­tu­tions man­age about 90 per­cent of the funds in the mar­ket, and I be­lieve China will have this trend,” said Ying, adding that his firm fi­nanced 12.2 bil­lion yuan this year.

There were 7,859 ven­ture cap­i­tal and pri­vate eq­uity in­vest­ments made in the first 11 months with a to­tal in­vest­ment of 668.3 bil­lion yuan. In the full year of 2015 was about 500 bil­lion yuan, ac­cord­ing to Zero2IPO.

“The funds were mainly in­vested in com­pa­nies at the early de­vel­op­ment stage or very ma­ture stage be­fore ini­tial pub­lic of­fer­ing, and those at the mid­dle de­vel­op­ment stage faced dif­fi­cul­ties in set­ting fi­nanc­ing,” said Ni.

There were 1,554 ex­its from Jan­uary to Novem­ber, com­pared to 606 in 2011. A to­tal of 231 exit deals were made by ini­tial pub­lic of­fer­ing and 62 per­cent of the listed com­pa­nies were backed by VC and PE funds.

“Shen­zhen Stock Ex­change and the Nas­daq Stock Mar­ket have brought in­vestors good in­vest­ment re­turns this year,” said Ni.

Ni Zheng­dong, chair­man of lead­ing ven­ture cap­i­tal and pri­vate eq­uity re­search com­pany Zero2IPO

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