In a year of significant Chinese stock market volatility, ongoing economic restructuring to boost China’s consumer sector, and slowing growth, to name a few catalysts changing the business landscape in China, Private Equity International picks out key events specifically impacting private equity investing.
1. Insurance companies launch debut funds
In January, a group of insurance companies led by Sun Life Everbright Asset Management joined together to launch the first-ever insurance-backed private equity fund in China. The initiative followed quickly after the China Insurance Regulatory Commission (CIRC) announced new rules allowing insurance companies to create their own private equity funds to invest in industries nominated by the government such as health care, elderly care, technology, biotech and infrastructure, and not just invest as limited partners. In October, Sunshine Insurance followed suit to set up its first vehicle.
2. CIC increases exposure to private equity
Sovereign wealth fund China Investment Corporation formed a new unit, CIC Capital in Q1 2015, which intends to work with domestic companies looking for overseas capital. CIC Capital, which is reportedly seeking $100 billion in total investment capacity, will step up CIC’s direct investments in long-term global assets especially in the US and Europe. The new unit will also focus on infrastructure, agriculture, forestry and fishery projects. It will operate much like the $40 billion government-backed Silk Road Fund, a fund established in November 2014 to invest in infrastructure projects in Asia. In December, CIC opened its representative office in New York to explore investment opportunities in the US and the Americas.
3. Didi Kuaidi raises billions stamping China on the VC map
China’s homegrown taxi-app created in February 2015 out of the surprise merger of two largest taxi hailing companies in China – Didi Dache and Kuaidi Dache raised $3 billion in 2015 in its first attempt at fundraising China’s answer to Uber planted the country on the map for venture capital investment. High profile investors included Tencent and Alibaba, Ping An Insurance, Japan’s SoftBank Group Corp, investment firm Tiger Global, Singaporean state investment firm Temasek and China Investment Corporation.
4. Postal Savings Bank raising $6.5 billion from investors
The Postal Savings Bank of China (PSBC), the country’s sixth largest commercial bank by assets attracted investments worth RMB 45.1 billion ($6.5 billion; €6 billion) from 10 high profile strategic investors, including the Canada Pension Plan Investment Board.
PSBC has more than 400 million retail customers and 40,000 branches across China and a deep rural depositor-base. It is China’s largest bank by customers and distribution network and is the sixth largest bank by total assets in China. It is the largest investment in a Chinese financial institution in the last five years and plans a $10 billion initial public offering in Hong Kong toward the end of 2016.
5. Chinese/French partnerships
More Sino-French private equity investments are connecting the west to China. Following the visit of Chinese president Xi Jinping to France in early 2014, more PE initiatives have been established in 2015 to cater to an increasing number of small and medium-sized Chinese enterprises seeking a European foothold.
In September, Cathay Capital Private Equity launched its €250 million Sino-French Innovation Fund that looks to invest in start-ups in France, China and the US. Along with the launch of its fund, the firm donated €500,000 to Shanghai-based business school CEIBS to establish the Cathay Global PE Research Fund, aiming to promote the study of PE trends, models and innovation in organisational structures.
France’s Idinvest Partners has also launched the Chance investment platform, which invests in parallel with Idinvest funds. It offers Chinese capital and access to Chinese markets to European SMEs focused on health care, environment, fintech and agri-food industries.