Private Equity in China: Challenges and Opportunities

CHAPTER 3

Private Equity in China

This chapter provides an overview of the private equity market in China and traces its recent development. There have been several notable private equity deals in China that represent key milestones in the private equity industry in China. These deals were selected because of their significance in terms of their deal structure, pioneering deals in industry sectors, and interactions with government authorities and regulations.

The private equity industry in China is forging its own path of development compared with other Western markets. These differences are, to a significant extent, a result of the regulatory environment and how private equity firms have evolved their operations to work together.

The Inventis Private Equity Model (introduced in Chapter 1) will be used as the framework to discuss present and future developments for the private equity industry in China. Within this framework, the various components of the private equity investment cycle will be elaborated and illustrated with actual deals.

These deals will be presented in the form of exhibits that are deliberately brief and concise. The aim of these exhibits is to provide readers with insight into the private equity industry in China.

OVERVIEW

Driven by strong economic growth and a stable political environment, China’s private equity market has expanded rapidly. The privatization of state-owned enterprises has led to increased opportunities for private equity firms looking for ...