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October 21, 2009

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Resumption of IPOs fuels VC, PE funds

THE resumption of initial public offerings in China spurred private equity and venture capital firms to invest more in the market in the third quarter of this year, but some VC firms are likely to withdraw from the market, according to an industry report.

Compared with the second quarter, VC firms invested 38 percent more, or US$785 million, in 122 companies in the third quarter, the Zero2IPO Research Center said in a report yesterday.

PE firms invested US$983 million, a jump of 42.7 percent from a quarter earlier, spread over 20 deals. In the second quarter they concluded 13 deals, the report said.

Sixteen VC firms raised US$1.26 billion in 18 mutual funds in the last quarter, declining 8 percent on a quarterly basis.

In the third quarter, 28 VC investments left China, with 20 of them withdrawing from initial public offerings, compared with four IPO exits in the first quarter and two exits in the second quarter.

"More VC firms will withdraw their investments from IPOs after more startup companies applied to list on the upcoming growth enterprise market," the report said.


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