PE-backed firms score better than public peers
By Louise Ho |
March 14, 2012, Wednesday
|
Print Edition
Print Edition
COMPANIES in China that are backed by private equity generated higher profit and growth than their public listed peers, an industry survey revealed yesterday.
PE-backed firms posted a 34 percent surge in annual revenue growth, which was 21 percent higher than the listed companies, the survey done by management consulting firm Bain & Company and the European Chamber of Commerce in China disclosed.
The PE-backed firms posted a 21 percent rise in annual profit, up 7 percent compared with their listed counterparts.
The survey compared the performance of 131 companies which received PE funding between 2004 and 2008 with about 3,000 public listed firms in China.
It also revealed that smaller PE-funded firms with revenue less than 1 billion yuan (US$0.15 million) managed to triple their revenue growth rate compared with listed companies.
"Private equity is helping to fuel growth in China, particularly among small- to medium-sized businesses,'' said Han Weiwei, a partner in Bain's PE practice in China and the survey's co-author.
The total amount of PE funds raised in China was US$30 billion last year, up from over US$8.5 billion in 2010, according to data by Zero2IPO.
The value of PE deals in 2011 was 0.15 percent of China's economy last year.
The survey said that PE's contribution to China's GDP will rise sharply if investments reach the levels of Europe and the US - 0.3 percent and 0.6 percent of GDP, respectively.
PE-backed firms posted a 34 percent surge in annual revenue growth, which was 21 percent higher than the listed companies, the survey done by management consulting firm Bain & Company and the European Chamber of Commerce in China disclosed.
The PE-backed firms posted a 21 percent rise in annual profit, up 7 percent compared with their listed counterparts.
The survey compared the performance of 131 companies which received PE funding between 2004 and 2008 with about 3,000 public listed firms in China.
It also revealed that smaller PE-funded firms with revenue less than 1 billion yuan (US$0.15 million) managed to triple their revenue growth rate compared with listed companies.
"Private equity is helping to fuel growth in China, particularly among small- to medium-sized businesses,'' said Han Weiwei, a partner in Bain's PE practice in China and the survey's co-author.
The total amount of PE funds raised in China was US$30 billion last year, up from over US$8.5 billion in 2010, according to data by Zero2IPO.
The value of PE deals in 2011 was 0.15 percent of China's economy last year.
The survey said that PE's contribution to China's GDP will rise sharply if investments reach the levels of Europe and the US - 0.3 percent and 0.6 percent of GDP, respectively.
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