China's economy continues to grow, powered largely by these successful small and medium private businesses, many of which are among fastest-growing companies in the world. Private equity and venture capital investment in China will likely reach record levels in 2009, the report projects, with over $1 billion in new investment into high-growth Chinese SMEs with strong focus on China's booming domestic market.
"In 2009, China should rightly be among the most attractive - and active - private equity investment markets in the world," the China First Capital report predicts. "Many of the international private equity firms we work with are expecting to invest more in Chinese SMEs in 2009 than in 2008. Chinese companies raising capital this year will enjoy significant financial advantages over competitors, improving market share and profitability."
The report identifies five central trends that will drive the growth in private equity and venture capital investment in China's SMEs in 2009. They are: (1) the drive for industrial consolidation; (2) profit growth helping to reignite the IPO markets for Chinese companies in China, Hong Kong and the USA; (3) increased importance of Convertible Debt and other hybrid financings; (4) opportunities for strategic mergers and acquisitions; (5) well-financed businesses with strong balance sheets will enjoy sustainable competitive advantage in China's domestic market.
"The pathways to success in China are fewer and narrower than in recent years," explains China First Capital's Peter Fuhrman. "But, for the entrepreneurs and private equity investors that can navigate their way in 2009, this will be a year of abundant opportunity."
