Surviving the winter of private equity in China

In the last 5 years, China’s private equity market grew substantially due to the gradual liberalization of its macroeconomic policies. It was also due to a partial opening of the economy to foreign investors that moved from the over-valued markets of the U.S. and Europe, to China and the emerging markets.

However, with concerns of overheating and the possible formation of asset bubbles, Chinese authorities started to take mitigating action to control the growth of excessive debt, by tightening regulations in the private equity market. This started with fund managers being required to register with the Asset Management Association of China (AMAC). Also, there were stricter information disclosure requirements. These tightened regulations served to ensure oversight and investor protection, in a bid to maintain the quality and sustainability of growth.

With smaller funds failing to make the cut, the measures have resulted in the cooling of the Chinese private equity industry, with the assets under management of private funds rising at a slower pace. This comes in the wake of China’s multi-year deleveraging program and escalating trade conflict with the US.

This might impact the large Chinese fintech players as well, which are currently enjoying successful funding rounds. For example, Ant Financial recently raised $14 billion in June from a group of investors that included a number of U.S. funds, among them Carlyle Group and Silver Lake Private Equity.

Meanwhile, the private equity industry in Asia is currently enjoying growth, with favourable policies being put in place. For example, funds will be able to set up in Singapore through a customised legal vehicle, following the passing of the Variable Capital Companies (VCC) Bill in October 2018.

The slowdown of the Chinese private equity will not only impact firms in need of funding, and players in the private equity market, but will have far-reaching implications for Asia as well.

What are the implications of recent regulations, as well as macroeconomic and other geo-political factors on the private equity market in China? How will a slowdown of the Chinese private equity market affect the emerging Asian economies, the trend of digitalisation and financial technology companies?

 The discussion will focus on the following areas:

• The effect of recent regulations on the private equity market in China
• The impact of macroeconomic and other external factors, including the multi-year deleveraging program and escalating trade conflict with the US
• The growth of the private equity market in the rest of Asia, and the effects of a potential slowdown of the Chinese private equity market
• The impact of the slowdown of the Chinese private equity market on digitisation and overall technological innovation in Asia and China
• The impact of the slowdown of the Chinese private equity market on financial technology companies

Invited Speakers:

Jimmy Leong is the Managing Director of Augentius Asia, one of the largest independent private equity and real estate fund administrators in the world. He is responsible for developing both new and existing client relationships, supporting business expansion across the Asia Pacific region.

Leong brings over two decades of experience in the financial services industry. He assumed senior management positions in organizations such as Glaux Investment, JP Morgan, Standard Chartered Bank, Bank SinoPac in global and capital markets, treasury, asset management and wealth management divisions across all asset classes. In the late 1990s, he was also instrumental in the setup and management of a family office, investing in global multi-asset classes and products.

Chen Min is a Partner in CreditEase Wealth Management, the wealth management arm of CreditEase, focusing on comprehensive global asset allocation services for high-net-worth individuals and mass affluent Chinese investors. He has over 17 years of experience in China’s private equity market.

Prior to joining CreditEase, he was a founding partner of Helios Capital, a private equity fund focused on the consumer and healthcare sectors in China. He was also in charge of making investments on behalf of SEAF VC fund. This gave him an in-depth understanding of the domestic and overseas venture capital and private equity markets

Chen has an MBA from Yale University and a bachelor's degree in Economics from the University of International Business and Economics.

Moderator:

Foo Boon Ping manages The Asian Banker publication business and engages practitioners, customers, partners and the media on critical issues that impact the industry. He has more than 19 years of experience in the banking and financial services industry, specializing in strategic branding, marketing communications and consumer insight. Prior to The Asian Banker, he was at United Overseas Bank (UOB), covering Singapore and key markets in the region, such as China, Indonesia, Malaysia and Thailand.