China's PE Market Immune from Decelerating Economy

Investors are positive about China's private equity market despite its slowing economic growth, according to a conference convened by Asian Venture Capital Journal.

The Chinese government's measures to push forward the clean technology industry will make the PE market particularly attractive, participants of the conference said.

"The performances of Chinese companies are not always in tadem with gross domestic product," argued Liu Haifeng, Kohlberg Kravis Roberts & Co.'s Greater China chief executive officer, "Private equity investors are more concerned about individual firms rather than a specific industry, and many industries in China are highly fragmented."

China's economic growth was 7.5% in the first quarter of this year, down from 8.1% in the previous three-month period, according to figures from the National Bureau of Statistics.

"The clean technology sector would be a good start [for PE investors] as the Chinese government announced an enormous ¥10 trillion plan for this industry," CVC Capital Partners' executive partner Francis Leung noted.

PAG chief executive officer Shan Weijian stressed the importance of funds denominated in the Chinese currency, the Renminbi, which are thought to be necessary for long-term commitment to China's PE market.

Foreign institutions including Blackstone Group and JP Morgan Asset Management have raised Renminbi-denominated funds over recent years.

A fully convertible Renminbi adds to the importance of funds denominated in the mainland's currency. China is ready for the Renminbi's free float; it is just a matter of political will, Primavera Capital's Fred Hu said.