Private equity firms prepare to put assets on the market

With the mainland's listing market having been closed for business for the past 11 months, private equity firms are clamouring to sell maturing assets locked up in their portfolios and return some profits to their impatient investors.

As a result of the suspension on initial public offerings on the mainland, many private equity firms have seen internal rates of return plummet from more than 30 per cent to single digits, putting them under pressure to improve their performance for their investors.

In theory, taking an alternative approach of making trade sales may seem to be an economically viable solution to their predicament, but the reality is that many dealmakers are reluctant to share their secrets to boosting the efficiency of the companies in their investment portfolios before taking them public.

Speaking at an industry forum last week, Fred Hu Zuliu, the chairman of China-focused private equity firm Primavera Capital and a former Goldman Sachs partner, flagged the reopening of the mainland listing market, which has been shut since November last year.

The remarks offered a fresh sign of hope for venture capitalists and private equity firms that have invested in 6,000 pre-float deals in the past five years, rekindling their desire to exit through the listing market on the mainland.

Even after the remarks by Hu - a close adviser to Beijing - it remains unclear exactly when the China Securities Regulatory Commission, the industry watchdog, will allow new stock listings to resume.