Material Adverse Change

CHAPTER 5Culture Is Critical

Bankers cannot afford to be concerned with only the economic aspects of projects. There may be serious implications on the natural environment, the urban environment, on human culture.

—Arthur Erickson, Canadian architect

A CASE STUDY FROM CHINA

I remember it like it was yesterday. We had worked for many months to establish a renminbi (RMB)–denominated private equity fund with a major Chinese municipality. As a European investor, buying companies in China was becoming difficult without a local fund. Most of the Chinese entrepreneurs wanted local currency in exchange for investment into their companies. Due to local restrictions, it was hard if not impossible to convert the U.S. dollar, pound, or euro currencies into the RMB that sellers could use locally. Although we had been quite successful historically, this was starting to impede our ability to make quality investments in China.

Many of the second-tier cities in China were attempting to attract foreign capital to help grow their infrastructure and economies. From our side, even those provinces that were considered second tier by Chinese standards had the sheer population size and explosive economic growth to make them some of the most attractive places to invest in the world. From the Chinese side, access to large, sophisticated international investors from the West was viewed as a good way to help fund this growth. Connecting the available capital with the need for it on the ground via ...