Tag Archives: private equity

PE, VC money should be in less of a hurry

PE and VC fund managers deserve sympathy at this time, having raised so much money recently only to be blindsided by Chinese policy shifts, as this Reuters article points out. But to continue throwing good money after bad is unconscionable. It would be far better to wait, watch and learn from what is going on at the moment in both Washington and Beijing.

Investing at this level in China has become next to impossible, if for no other reason than public exit strategies are likely to be held hostage by either or both of the US and Chinese governments as their trade war morphs into a financial war. Nevertheless, three strategies seem to have emerged as the consensus: 1) Invest in the government’s priorities; 2) Invest in domestic-focused firms; and 3) Brush up on Xi Jinping Thought.

Each begs rebuttal: 1) Investing in the Chinese government’s priorities is akin to investing in future victims of the US-China conflict; 2) Investing in domestic-focused firms is no assurance of avoiding US Entity Lists; and 3) Xi Jinping Thought is mass-market propaganda that is useless to read in isolation from the broader context of Chinese history.

Now is the time to keep the powder dry. There is further carnage ahead, believe it. This is especially for funds investing in the GBA from their offshore base in Hong Kong.

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Guangdong Financial High-tech Zone turns 12

The Guangdong Financial High-tech Zone, located in Foshan’s Nanhai district, close to the border of Guangzhou, has attracted more than 670 financial institutions and enterprises in the past 12 years. 

Yes, we have never heard of it, either. 

The provincial government backed high-tech zone, which is positioned as a support base for the development of the province’s finance industry, has seen its companies execute investments worth RMB112 billion, with RMB820 billion of assets under management.  

The zone is home to over 30,000 staff, primarily working as back-office support to finance companies. They work mostly in clusters. In the Qiandenghu (Thousand Lamp Lake) town, for example, there are 489 private equity funds with names such as IDG Capital, Technology Financial Group, Beijing Heju Investment, and China Trust Protection Fund. These have raised a total of RMB61 billion. 

Last year, the Financial High-tech Zone set an audacious new goal for itself: to create a “blockchain” powered fintech innovation base, and to construct a complete value chain that complements the ​​Qiandenghu Venture Capital Town.

Now that we know about it, watch this space for more detailed introduction to the zone.