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Sunday, 11 March 2012

maybe employ value investing conglomerate model (dividend growth, vs exits)!?. Too Few Exits: The PE Camel Can't Pass Through the Eye of China's IPO Needle | China Private Equity

Too Few Exits: The PE Camel Can't Pass Through the Eye of China's IPO Needle | China Private Equity:

hmm.. very interesting.

I wonder if there is any linkage to the 'hidden economy' linkage to this story..!?? see the piece on new york times (re China's Hidden Wealth Feeds an Income Gap, January 25, 2012 ).

I personally think vintage/duration for VC/PE might need to be longer for the Chinese market given how quickly it evolves at present... it might make sense to employ a transparent private conglomerate model that focus on dividends (value investing) rather than short term exits.. but that is just IMHO.

"Measured by new capital raised and investment results achieved, China’s private equity industry has grown a position of global leadership in less than a decade. There is still no shortage of great companies eager for capital, and willing to sell shares at prices highly appealing to PE investors. But, unless something is done to increase significantly the number of PE exits every year,  the PE industry in China must eventually contract. That will have very broad consequences not just for Chinese entrepreneurs eager for expansion capital and liquidity for their shares, but also for hundreds of millions of Chinese, Americans and Europeans whose pension funds have money now invested in Chinese PE. Their retirements will be a little less comfortable if, as seems likely,  a diminishing number of the investments made in Chinese companies have a big IPO payday.

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