DCP Cap to ride upgrade trend

DCP Capital, a private equity firm with investment focus on China, will exploit opportunities arising from the ongoing consumption upgrade as that fits in with the firm's long-term outlook and value-based investment orientation, according to the company's top management.

Led by David Liu, executive chairman, the DCP team has led a number of successful transactions. Over the past 25 years, it nurtured numerous industry leaders, such as Ping An Insurance, China Mengniu Dairy Co, Qingdao Haier Co, and Far East Horizon, among others.

"Our investments over the coming years will center around China's consumption upgrade. What 'consumption upgrade' means for different sectors of the economy－in fact, that is also changing over time. The desire for better food or household electrical appliances in 1990s is now comparable to the growing demand for better medical treatment and quality education," Liu said.

DCP recently announced that it has reached a definitive agreement with Venus Medtech for an equity investment. Venus Medtech is dedicated to providing cardiovascular products for structural heart disease and its first generation of trans-catheter aortic valve replacement or TAVR product, Venus A, was the first such product in the country approved by the China Food and Drug Administration in April 2017.

The product has been already introduced in top-tier cardiovascular hospitals and has been endorsed by a panel of leading cardiologists in China.

The investment will facilitate Venus Medtech's development of its sales network to establish the leading position in China's TAVR market, Wayne Wang, managing director of DCP, said.

Since its first introduction in Europe in 2007 and later in the United States, TAVR technology and products have been fully validated in developed markets and the global market is forecast to grow from $3 billion in 2017 to $5 billion globally in 2020 with strong momentum thereafter.

Edwards Lifesciences, an international leader in this sector, has half of the revenue attributable to TAVR products, and is valued at $28 billion.

"We believe this is a business with significant growth potential and high entry barriers. Moreover, DCP is delighted to have the opportunity to invest in Venus Medtech given the company's outstanding management team, strong technological capabilities and deep industry knowledge," Liu said.

As the first company that has been granted approval by the CFDA for a TAVR product, Venus Medtech has a critical first-mover advantage in China that has proven to be extremely durable in other markets.

China has a large and growing pool of TAVR patients as the population ages and life expectancy increases. This patient group was previously shut out from the surgical room due to high risk of complications and damage during the operation and now Venus Medtech is offering a solution for millions of affected families.

Eric Zi, co-founder and CEO of Venus Medtech, said, "This cooperation will benefit from the DCP team's 25 years of successful investment experience in China. In particular, we hope to leverage DCP's significant investment and acquisition experience, and its portfolio management capabilities to accelerate Venus Medtech's expansion."

Fan Hang contributed to this story.