Chinese private equity funds aim to achieve record level funding in 2021 as global investors are to increase their exposure to the country despite the pre-existing tensions in the United States, especially with the present escalating sanctions row between Washington and Beijing, as well as the growing scrutiny of China’s technology groups. A few fast-growing Chinese investment funds such as Primavera Capital Group and Boyu capital (which were both early investors in Jack Ma’s Ant Group) have launched what is expected to be their largest ever US dollar funds in recent weeks. Moreover, these funds would be considered as the 2 largest US dollar funds launched by an independent investment manager in China, with Boyu and Primavera funds targeting funds up to $6 billion and $5 billion respectively.
In recent times, China’s domestic private equity market has been growing rapidly, especially with regards to US dollar fundings, as funds bets have indicated to investors alike a high promise with success. The unprecedented amount of USD coming into fund last year was demonstrated by the average fund size in China almost doubling from $415 million in 2020 to $756 million in 202. The surge in fundraisings is partly attributed to China’s strong economic recovery from the Covid-19 pandemic as well as concerns over high valuations in the public markets. Also, this growth for fundraisings was a sign from investors originating from the US and the middle east for Chinese companies with technology and healthcare industries.
Since 2017, fundraising activities have declined for 3 consecutive years till 2020, with Asia-focused funds raising $90 billion in 2020, which was 64% lower than the peak in 2017, while private equity-backed deals in the region rose by 19% to a record level of $185 billion in 2020. Moving forward in 2021, China will also increase focus on Asia, similar to many regional and global funds.
Credits to: Chantelle Xin Yi Lee