If you’re working at an investment bank and are looking to get into private equity, now might be the time. Given that the big Chinese funds are run by ex-bankers, the culture is similar.
Along with global investment firms like KKR and Blackstone, China’s private equity firms are on the hunt for assets and talent following the slump in public equity markets and mergers and acquisitions activity.
Private equity accounted for a record share of Chinese mergers and acquisitions in 2021, and after raising new funds they are looking for opportunities particularly in the tech sector.
FountainVest Partners which is led by former Goldman banker Frank Tang, has boosted headcount by 10% in the last six months and in January it made a statement of strategic intent by appointing Andrew Huang to a newly-created role as head of cross-border and tech/growth investing.
Huang joined FountainVest four years ago from Goldman, where he was head of M&A for China. His new role shows the firm is looking to spread its wings, although it could be a while before Hong Kong-based Huang can start doing deals.
Private equity activity may take a while to gain momentum in 2022 following a combination of market dislocation, a government clampdown on fast-growth sectors and strict COVID rules triggered a slump in activity in the fourth quarter. “The border between Hong Kong and China remains shut. Chinese firms pressed the button on hiring plans in December but then Omicron hit. They are waiting until the border is open before going full throttle,” said one headhunter based in Beijing.
Boyu Capital and Primavera Capital Group have also been deploying firepower, with Primavera acquiring the Greater China nutrition business of Mead Johnson from Reckitt Benckiser for $2.2bn. Hillhouse Capital, founded by Zhang Lei n 2005 has invested in JD Health, China’s largest online health platform as well as Airbnb, is also scouting for opportunities.
There is also demand for Chinese talent from outside China. One headhunter said that Singapore-based funds were interested in talent looking to relocate from Hong Kong, and that he had found a dozen candidates willing to do so for one position. “At the moment it’s difficult to sort out visas and get people over the line, so it’s a waiting game. But there’s a lot of pent-up demand for talent”
Primavera Capital’s founder Fred Hu, another ex-Goldman banker, is confident that the clampdown by the Chinese government will not harm the backdrop for PE investing. “In my opinion, the intention of these regulatory policies is not to crack down on the technology industry or to stifle the innovation and development of the private sector,” Hu wrote on a company blog.
“An ultimate possible outcome is that relevant departments and tech companies reach a consensus and a win-win situation through consultation and communication. “They may also explore a set of reasonable and effective regulatory frameworks, which can not only safeguard public interests but also promote prosperity and innovation of the tech industry.”
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