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VC, PE heating up in China

11-25-2010 14:03 BJT

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As we know, hot money is after one thing - higher returns. And here in China, hot money is pouring into the booming private equity sector.

Generous returns - that's the main reason behind the remarkable development of China's Venture Capital and Private Equity Market. In the third quarter of this year, 165 companies were listed. Around 109 are Chinese companies, twice as many as the total IPOs of other countries combined. What's driving this figure, is the promise of substantial returns. 116 Venture Capital and Private Equity investors behind those listed companies, received an average return on investment, of 8.45 times. Some of those returns are as high as 53 times.

Ni Zhengdong, CEO of Qing Dynasties Venture said "There used to be only hundreds of VC and PE companies in China, but now there are thousands of them. Shenzhen alone has nearly a thousand VC and PE companies, it's really a booming industry."

The latest data shows short-term investment in IPOs has increased significantly, while long-term investment remains the stable. Insiders say, even though capital is sufficient, a good project is still hard to come by, and the shortage of management personnel is another challenge.

Xiong Xiaoge, President of IDG Capital said "The biggest problem in the VC and PE industry is while capital inflows are good, we're in short of qualified management personnel."

Until now, total financing of Chinese listed companies has reached over 36 billion U.S. dollars, accounting for almost 80 percent of total global financing.

Editor:Xiong Qu |Source: CNTV.CN

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