Investors maintained their enthusiasm for Chinese companies in the past quarter as an array of new funds were raised and the latest public listings generated abundant returns to investors, recent reports show.

 

Private equity

 

Private equity firms raised a total of US$9.67 billion for 15 Asia-focused funds in the third quarter, up 88.5 percent over the same period a year ago, according a report by Zero2IPO, a Beijing-based researcher focusing on the nation's venture capital and private equity sectors.

 

Of the newly established funds, buyout funds raised US$5.27 billion, more than half of the total. The capital available is expected to give a boost to the Chinese buyout market, which has registered only modest growth over the past year.

 

Forty-three Chinese enterprises attracted US$3.47 billion from 38 private equity investors in the third quarter, a year-on-year growth of 36.3 percent .

 

Traditional industries were the clear favorites for private equity investors, with more than half of the investment in the third quarter going to those companies in the sector.

 

United States-based private equity firm Blackstone was among those that looked to traditional industry when it spent US$600 million this September to acquire 20 percent of China National BlueStar (Group) Corp, a major chemical maker in the nation.

 

Private equity firms now have strong interests in traditional industries such as manufacturing, real estate and chemical manufacturing.

 

In the second quarter, 18 traditional enterprises secured US$2.64 billion in investment from venture capitalists, or 76.3 percent of the total.

 

The nation's fledgling service sector is another focus of investment as 12 enterprises from services industries landed US$417.8 million, or 12.1 of the total amounted invested.

 

Venture capital

 

During the same period, 13 venture capital firms raised US$1.32 billion to invest in China. Among them, domestic companies established eight funds with a total of US$330 million as local enterprises and wealthy businesspeople prepare to enter the venture capital business.

 

Eighty-eight local start-ups secured US$897 million from venture investors, rising 29.2 percent to a new high for the period. Hotel, education and entertainment companies were the most poplar for investors.

 

Ambow Education Group, a Beijing-based online education company, secured a US$54 million investment, a sign of growing venture capital interest in the nation's education sector.

 

It was the biggest venture capital investment in the country's education sector, more than the combined total of three deals announced last month.

 

Macquarie Bank Group led the deal, supported by existing investors CID Capital, Cisco Systems and new investor Avenue Capital. China Renaissance Partners advised Ambow on the deal.

 

IPOs

 

In the third quarter, a total of 73 domestic companies held share offerings at home and abroad. Among them, 29 companies received funds from venture capital or private equity firms that were then able to profit from share sales.

 

Local companies raised a total of US$21.86 billion in the third quarter through overseas stock exchanges. In addition to Hong Kong and New York, exchanges in Tokyo and Seoul also attracted Chinese companies.

 

On August 6, China Boqi Environmental Solutions Technology Co Ltd held its share sale on the Tokyo Stock Exchange. The Beijing-based firm became the first Chinese company to list in Japan.

 

Also in August, Shenzhen-based 3Nod, an audio equipment maker, went public on South Korea's stock exchange, becoming the first foreign company to list there.

 

(China Daily October 29, 2007)