China's PE investors seek new opportunities

BEIJING - China's economic downturn is forcing private equity investors to look for new growth opportunities in the sector, insiders said Wednesday.

Wu Huaquan, managing director of Guangzhou Chuangchen Capital Management Co Ltd, told Xinhua at the ChinaVenture Investment Conference that the country's slowing economy had reduced the number and quality of potential projects for PE investors.

"At present, the industry is in the process of transformation and upgrading," Wu said.

Data released by ChinaVenture, a leading PE data provider, showed that PE investment cases and total volume have both been sliding since the third quarter of 2011.

In the third quarter of this year, ChinaVenture revealed a total of 45 investment cases and total volume of $5.1 billion, down from 111 cases and $8.55 billion year-on-year, respectively.

After fierce competition in recent years, PE investors have now found their clear position in terms of their target industries of investment, Wu said.

Shan Xiangshuang, chairman of the China Science and Merchants Capital Management Co, said at the conference that the transformation in the PE industry posed many opportunities for market players.

"PE investors can focus on improving value-added services, making rational investment, enhancing corporate management, upgrading the businesses and readjusting their strategies," Shan said.

Wu said that under the current conditions, investors should nurture prospective projects with a mid- to long-term perspective and invest in fields and markets that they are familiar with.

Official data released earlier this month showed China's economy expanded 7.4 percent year-on-year in the third quarter of 2012, slowing for the seventh consecutive quarter.