Quarterly Research Report on China’s Private Equity Market - Q1/2009

ChinaVenture 2009 年第一季度中国私募股权投资市场研究报告 China Private Equity Market Report Q1 2009

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ChinaVenture 2009 年第一季度中国私募股权投资市场研究报告 China Private Equity Market Report Q1 2009

Part I: Review on Q1/2009 Domestic PE Investment Market 1. Outline of Q1/2009 Domestic PE Investment Market With continued macro-economic recession, PE investment size was dramatically shrinking since the first quarter of 2009. Over the past three years, the favorable market environment contributed to the rapid growth of domestic PE investment market, and the glut of hot money led to irrational, simplified PE investment strategies; However, the golden ages wouldn’t last forever, a string of unexpected factors, including deteriorating global economic situation and domestic lifting of restrictions on non-tradable stares, badly damaged investor confidence and blocked the pipelines for capital exit, catching PE investment institutions in a dire dilemma. Overall, in Q1/2009, Chinese PE market was marked by three features: First, the fundraising scale was on the decrease. But it is to be noted here that, the government-sponsored funds had constituted the majority of the all that commenced or completed their fundraisings during this quarter. Second, the investment amount saw a sharp drop, and the market became more rational. Investment institutions walked away from hotspot industries to traditional ones, being more focused on strong anti-cyclical sectors. By the industry attractiveness to investment, Manufacturing, Chain Store & Franchise and other traditional industries will gain more popularity amidst the current economic environment; On the other hand, due to governmental policy supports, some industries such as Clean Energy and Modern Agriculture will remain very attractive to investors. Third, as exit channels were still yet to be unclogged, IPOs on domestic A-share market remained stuck in stagnation, and world's major capital markets, especially the U.S. capital market, were darkened by the shadow of continued downturn, it would be more tough for investors to exit via IPO. But not all the news are bad ones. Due to massive government spending packages to stimulate domestic investments, the activity in domestic M&A market has been strengthening over time. 1

Quarterly Research Report on China’s Private Equity Market - Q1/2009

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Quarterly Research Report on China’s Private Equity Market - Q1/2009

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