Private Equity in China: Challenges and Opportunities

CHAPTER 5

Investment Opportunities for Private Equity in China

China’s growing economy offers enormous investment opportunities for private equity in China. With one of the fastest growing middle classes in the world and positive macroeconomic conditions, private equity firms are expanding rapidly in China to tap its economic growth and potential.

This chapter discusses the opportunities for private equity investment in China. Readers should note that this chapter alone will not capture all of the investment opportunities available in China. To this end, the approach for this chapter is twofold. First, this chapter will discuss investment opportunities in the industry sectors singled out by China’s National Party Congress in their 12th Five-Year Plan in 2011. The sectors that were featured in the 12th Five-Plan will benefit from favorable government policies in the near future. Second, the Chinese government announced seven key strategic industries that will be actively encouraged in the near future. These seven strategic industries will benefit from favorable government policies in the near future. Private equity firms that seek out investment opportunities in these sectors will be able to position themselves well to reap significant financial rewards when they exit.

OVERVIEW

Every private equity fund operating in China has its own investment mandate and strategy. A private equity firm operating in China will inevitably come across a multitude of economic regulations and policies ...