Private-equity firms woo investors
Mainland private equity firms are seeking foreign investors in an attempt to internationalise their businesses by raising US dollar funds.
Margaret Shao, the managing partner of Shenzhen Fortune Venture Capital, said private equity firms saw it as the right time to raise dollar funds in the face of growing offshore deals by mainland companies and domestic joint ventures with foreign partners.
'However, it is no easy feat,' Shao said at a conference organised by the Hong Kong Venture Capital and Private Equity Association yesterday.
'We still can't break into the circle of international LPs [limited partnerships],' she said. 'We closed a 3.5 billion yuan [HK$4.2 billion] fund within three months with some individual, local LP, and they wrote us a cheque within three hours.
'But it's not the case with international LPs. They take a longer time to do due diligence, and they are more cautious in their decision making.'
Shao said her company would recruit professionals with overseas backgrounds and strong business networks, and seek opportunities to invest with partners which are experienced in raising dollar funds.
Lily Huang, the managing director of Shenzhen-based Co-Win Venture Capital Investment, said foreign investors could be deterred by the corporate governance issues concerning China-origin companies listed on the Nasdaq. But she believed small and medium-sized private enterprises on the mainland would still be attractive.
'I believe private equity will become the third-largest source of capital for companies in China, apart from bank loans and public offerings,' Huang said. 'China is like the US in the 1970s. There are still a lot of grey areas which have yet to be defined and regulated, that's why private equity firms will play a big role in bridging investors and companies.'
Lui Wing, a partner of Shenzhen Oriental Fortune Capital, said private equity companies had to yet to resolve the potential conflicts of interest that could arise when they managed yuan and US dollar funds.
