More China buyouts for foreign private equity as entrepreneurs struggle with succession
Competition and technological developments have also prompted first-generation businessmen to look for professional advice and management skills
Foreign private equity investors are finding more and more buyout opportunities in China, as mainland entrepreneurs become more open to giving up majority ownership and control as they struggle to find successors in their families, say industry participants.
Growing competition and fast-paced technological developments have also prompted first-generation entrepreneurs to look for professional advice and management skills, said Rebecca Xu, co-founder and managing director of Asia Alternatives.
“The recent trend is an increase in buyout opportunities in China. These are typically companies that have to implement operational transformation, or the first generation of entrepreneurs who, in their sixties, are in succession situations,” said Xu.
Asia Alternatives has more than US$11 billion in assets under management across buyout, growth and expansion, venture capital and special situation funds. It invests with top performing private equity fund managers across Asia, primarily in China, as well as in Japan, Korea, Southeast Asia, India and Australia.
“More shareholders and founders are willing to give up controlling positions – either immediately or several years later,” she said.
On the other hand, investors are also demanding control over management decisions because of growing business competition, she said.