Niche investors making inroads
May 31, 2010 Category Mergers & Acquisitions, Weekly
Global private equity firms continue to dominate investments in Chinese companies, but smaller players are finding their way into the market, says Adam Bornstein, Hong Kong-based Vice President of private equity firm CDIB Capital. Fifteen out of 60 new China listings came to the market last year with the help of funding injected by private equity firms two to three years before their flotation on the Hong Kong stock exchange, including by big players such as the Carlyle Group and Bain Capital. Smaller firms such as CDIB, which has just a tenth of the capital managed by large funds, are beginning to find value in niche sectors in China. Bornstein is hoping CDIB Capital’s USD20 million investment in Dalian-based Chemphy, a manufacturer for pharmaceutical companies such as Japan’s Sumitomo Chemical and Germany’s Bayer, will meet this year’s financial budget so that its share sale will be on track. CDIB aims for a return that will double its investment. Data compiled by the Center for Asia Private Equity Research, a Hong Kong-based research company, show the amount of private equity funds raised for investing in Chinese companies peaked in 2008, reaching a total of USD17.6 billion. Investing was then hit by the liquidity crisis and as a result only USD9.6 billion was raised by private equity funds last year, the South China Morning Post reports.
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