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VC, PE firms take the initiative

VENTURE capital and private equity firms were active in the second quarter of this year on anticipation of a resumption of new share sales and the launch of a Nasdaq-like board.

VC firms invested about US$568 million, rising 77.6 percent from the first quarter. The money was invested in 99 companies on the Chinese mainland, up from 53 in the first quarter, the Zero2IPO Research Center said in a report yesterday.

"The recovery of China's economy, resumption of initial public offerings and release of rules for the Growth Enterprise Market all spurred venture capital investors' confidence in the Chinese market," the report said.

PE firms invested US$5.31 billion on the mainland in the second quarter, compared with US$470 million in the first quarter and US$2.86 billion a year earlier.

The research center attributed the increase in PE investments to Hopu Investment Management Co's US$4.62 billion purchase of 8.53 billion H shares in China Construction Bank from Bank of America.

In the second quarter, 11 domestic companies launched initial public offerings in overseas markets, five of which were backed by VC and PE firms. The five companies collected a combined US$1.76 billion, accounting for 75.6 percent of the total, the report said.

The China Securities Regulatory Commission resumed IPOs last month after the Shanghai Composite Index reached 3,123 points, a 72 percent gain this year, to become the best-performing market in the world.

Four companies - Sichuan Express, Guilin Sanjin Pharmaceutical Co, Zhejiang Wanma Cable Co and Your-Mart Co - have gained final approval to float new shares.

About 30 more companies, including China State Construction Engineering Co, Everbright Securities Co and China Merchants Securities, have been waiting to list on the main board.

"The resumption of new share sales and the launch of the Growth Enterprise Market will allow VC and PE firms to withdraw their investments via IPOs," the report said.


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