Alibaba delay piles pressure on private equity investors
News that Boyu Capital plans to sell its stake highlights issue of investment exits in region
The timetable for the listing of mainland e-commerce giant Alibaba is becoming increasingly important to one of its major private equity investors - Boyu Capital - which has announced it would quit its investment to take profit.
Boyu, co-founded by a handful of well-connected executives including Mary Ma and Louis Cheung, is looking to exit its holding through Alibaba's proposed multibillion-dollar initial public offering to book profits.
But a delay in the e-commerce giant's long-anticipated offering is causing a consequent delay to Boyu's own schedule of making a return to investors - and to its plans to raise fresh capital in a new fund.
Investors familiar with the matter told IPO Watch that Boyu's second fund, a US$1.5 billion investment vehicle with a similar lock-up and fee structure to its first fund, was now two months behind the original fund-raising schedule.
Boyu is not alone in struggling to secure exits from holdings.
About 10,000 deals worth a combined US$230 billion were completed on the Chinese private equity market in the past 12 years, and 7,500 of those deals remain "unexited", according to China First Capital, a mainland brokerage. This has left about US$130 billion of private equity and venture capital investment locked up in mainland companies with very few exit options available.