Private equity investors remain confident about the long-term prospects of the industry in China despite the global financial turmoil, an industry survey said.
The investors are expecting investment activities to increase as "private equity in China is a relatively young and dynamic market that changes rapidly, presenting tremendous opportunities as well as uncertainties for investors," said Lawrence Chia, head of corporate finance for Deloitte Asia Pacific and China.
"The China market showed resilience in the first half of 2008,'' Chia said. ''Our survey also demonstrates solid confidence in the PE market over the next year and in the longer term despite the mixed views about the immediate outlook for PE in China amid various changes in regulations, recent credit conditions and the economic environment."
Based on the findings of the survey, which was done in August, and Deloitte's conversations with clients, valuations are expected to be lower as a result of declining public equity markets. This may provide opportunities for new investment, the firm said.
While PE investors are confident about the long-term growth of the industry in China, the optimism among China PEs means competition will increase with more new domestic and foreign players entering the market.
Consumption, power and manufacturing are the key growth sectors identified by the survey's 30 PE respondents in China while a majority of them, 83 percent, showed strong interest in the clean energy sector driven by government subsidies and available credit to support its growth.
China received US$1.7 billion in PE investments up to the middle of 2008, a slight increase from US$1.6 billion in the same period last year. It is the highest PE investment in Asia Pacific, excluding Japan, according to the Thomson Reuters mid-year 2008 private equity report.
(Shanghai Daily September 25, 2008)