quarterly research report on china’s private equity market - q1/2009

I

ChinaVenture 2009 年第一季度中国私募股权投资市场研究报告 China Private Equity Market Report Q1 2009

Copyright © ChinaVenture 2009

Quarterly Research Report on China’s Private Equity Market

- Q1/2009

1

ChinaVenture 2009 年第一季度中国私募股权投资市场研究报告 China Private Equity Market Report Q1 2009

Copyright © ChinaVenture 2009

Part I: Review on Q1/2009 Domestic PE Investment Market

1. Outline of Q1/2009 Domestic PE Investment Market

With continued macro-economic recession, PE investment size was dramatically shrinking

since the first quarter of 2009. Over the past three years, the favorable market

environment contributed to the rapid growth of domestic PE investment market, and the

glut of hot money led to irrational, simplified PE investment strategies; However, the

golden ages wouldn’t last forever, a string of unexpected factors, including deteriorating

global economic situation and domestic lifting of restrictions on non-tradable stares, badly

damaged investor confidence and blocked the pipelines for capital exit, catching PE

investment institutions in a dire dilemma.

Overall, in Q1/2009, Chinese PE market was marked by three features: First, the

fundraising scale was on the decrease. But it is to be noted here that, the

government-sponsored funds had constituted the majority of the all that commenced or

completed their fundraisings during this quarter. Second, the investment amount saw a

sharp drop, and the market became more rational. Investment institutions walked away

from hotspot industries to traditional ones, being more focused on strong anti-cyclical

sectors. By the industry attractiveness to investment, Manufacturing, Chain Store &

Franchise and other traditional industries will gain more popularity amidst the current

economic environment; On the other hand, due to governmental policy supports, some

industries such as Clean Energy and Modern Agriculture will remain very attractive to

investors. Third, as exit channels were still yet to be unclogged, IPOs on domestic A-share

market remained stuck in stagnation, and world's major capital markets, especially the U.S.

capital market, were darkened by the shadow of continued downturn, it would be more

tough for investors to exit via IPO. But not all the news are bad ones. Due to massive

government spending packages to stimulate domestic investments, the activity in

domestic M&A market has been strengthening over time.

37 Copyright © ChinaVenture 2009

Quarterly Research Report on China’s Private Equity Market - Q1/2009

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quarterly research report on china’s private equity market - q1/2009

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