What for you has been the most significant private equity trend seen in 2010 in the Chinese market and why?
Two things happened in 2010. Firstly, the RMB onshore funds raising and investing are outpacing the USD funds. Secondly, the combined amount raised in IPOs on Shanghai and Shenzhen Stock Exchanges is surpassing that of Hong Kong Stock Exchange.
Both of the above indicate the coming of age of the Chinese domestic capital market.
What do you anticipate 2011 will bring?
China will continue its robust growth driven by domestic market demand. On the other hand, the companies are operating in a trickier environment as the initial government stimulus is fading out, and the next phase of government policies and politics around the world is a significant risk factor.
The Chinese private equity market will remain hot, if not a bubble, with significant liquidity and new managers. Competition and valuation is becoming more challenging in an otherwise historically inefficient market. A private equity industry shakeout is bound to happen in the next two to three years.