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PEDaily E-Magazine Issue No.507 Summary

Core Content

This issue of PEDaily E-Magazine, published on October 28, 2011, provides an overview of the PE investment market in China during the first 11 months of 2011, highlighting fundraising trends, investment activities, and key developments in the industry. It also covers IPO-related news, new fund launches, and sectoral investment preferences.

Main Points

PE Fundraising Trends (Jan-Nov 2011)

• 204 PE investment funds were closed in the first 11 months of 2011.
• 195 funds disclosed their fundraising amounts, totaling US$33.58B, surpassing the total amount raised in 2010.
• RMB-denominated funds outperformed foreign currency funds in both number and amount of fundraising.
• Year-on-year growth was observed in fundraising, with a 175.7% increase in the number of funds and a 27.2% increase in total capital raised.

Investment Activities

• A total of 654 investment deals were closed during the period.
• 610 deals disclosed an investment amount of US$23.81B.
• Machinery manufacturing emerged as the top industry for PE investment, with 62 deals completed in 2011, a 2.82x increase compared to the same period in 2010.
• Raw chemicals and processing industry ranked second with 55 deals, up 4.58x year-on-year.
• Bio/Healthcare industry, which was a hotspot in 2010, saw a 10.2% year-on-year growth, but dropped to third place.

New Fund Launches

• H&J Group launched Suzhou Heda Fund, a RMB500M PE fund focusing on pre-IPO projects in hi-tech, biomedicine, advanced manufacturing, energy conservation, and environment protection.
• iDT completed its RMB200M first close for a RMB500M fund, initiated with Chongqing Technology Development Guidance Fund.
• Flight Manager, a mobile app for flight information, raised US$15M in Series B funding from Matrix Partners and Greylock.
• Jishang Equity Investment Fund was established by Jishang Chamber of Commerce, targeting regional venture capital, growth capital, and M&A in Jilin Province, with plans to raise RMB300M initially and RMB10B over ten years.

IPO and Market Valuation

• Chow Tai Fook witnessed a significant drop in market valuation on its first day of trading, from HK$24B-HK$30B to HK$150B, a 50% decrease.
• Cheng Yu-tung's family held 74% equity in the company, but their HK$11.1B valuation still fell short of Li Ka-shing's HK$186.8B fortune.

Other Developments

• Jingneng Clean Energy plans to list in Hong Kong, aiming to raise HK$1561M through the sale of 1135 million shares.
• The issue price will range from HK$1.59 to HK$1.75, with the final price set on December 15 and the listing date on December 22.
• Four fundamental investors, including SAIF Partners, Goldwind, Everbright Holdings Direct Investment Fund, and Jiekete Investment under China Aerospace Science and Technology Corporation, have already subscribed to US$140M worth of shares.

Key Information

• Total fundraising: US$33.58B
• Total investment deals: 654
• Total investment amount: US$23.81B
• Top industry for investment: Machinery manufacturing (62 deals)
• New fund highlights:
  • Suzhou Heda Fund (RMB500M)
  • iDT's RMB500M fund (first close: RMB200M)
  • Jishang Equity Investment Fund (targeting RMB10B over 10 years)
• IPO highlights:
  • Chow Tai Fook's valuation dropped by nearly 50%
  • Jingneng Clean Energy plans to list in Hong Kong, raising HK$1561M

Conclusion

The Chinese PE market showed strong growth in fundraising and investment activities in the first 11 months of 2011, with RMB-denominated funds leading the way. While machinery manufacturing became the top investment sector, bio/healthcare and pre-IPO projects remained significant areas of interest. Notable new fund launches and IPO developments reflect the dynamic nature of the market, despite challenges such as valuation adjustments and market volatility.