Foreign VC/PE firms remain confident in the long-term development of the China Market
The survey indicates that the short-term investment confidence of foreign VC/PE firms was, to some extent, hit by the global financial crisis and China's current economic difficulties. Meanwhile, foreign VC/PE firms continue to hold confidence in the long-term development of China's VC/PE market. 43.6% of respondents said that their short-term investment confidence in China has been weakened. 84.6% of respondents said their long-term investment confidence remains unchanged while 15.4% expressed increasing long-term confidence.
Foreign VC/PE firms remain confident in the long-term development of China's VC/PE market, mainly because they believe in the long-term prospects of the Chinese economy and small and medium-sized enterprises (SMEs). In addition, they maintain that the global financial crisis and China's current economic situation offer the VC/PE industry opportunities for growth, for example lower investment costs (97.4%); more rational investment mentality (69.2%); an increasing emphasis on the value-added service for portfolio companies (43.6%); and the surface of high-quality deals (41.0%) - all of which will have positive impact on the long-term development of the industry.
Foreign VC/PE firms believe that China's VC/PE market will complete the current round of adjustments within 1-3 years
The surveyed foreign VC/PE firms widely hold the belief that China's VC/PE market will complete this round of adjustments within 1-3 years. Specifically, 48.7% of respondents believed that the Chinese VC/PE market will complete this round of adjustments within 1-2 years; 38.5% believe within 2-3 years; 7.7% believe within 1 year. Only 5.1% believe it will take over 3 years.
97.4% of foreign VC/PE firms interested in setting up RMB funds
The survey reveals that foreign VC/PE firms are very keen on setting up RMB funds. A vast majority (97.4%) of respondents said that they are interested in establishing or planning to set up RMB funds, whereas only 2.6% expressed no interest.
The main reasons for such high interest lie within certain factors: the overseas exit channels for foreign VC/PE have narrowed, while China has witnessed substantial improvements in the exit environment and has established a regulatory environment for foreign investors to set up RMB funds; the global financial crisis has caused asset shrinkage of overseas institutional investors and resulted in a more cautious investment mentality of foreign LPs, which has made VC/PE overseas financing more difficult. 10.3% of respondents held the view that the target of their new round of financing has changed from overseas LPs to domestic Chinese LPs as a result of the global financial crisis.
Environmental protection and new energy, consumer products and services, and healthcare sectors will be the key areas for foreign VC/PE investment in the next 1-2 years
The survey shows that in the next 1-2 years, the top three sectors for foreign VC/PE investment will be environmental protection and new energy (79.5%), consumer products and services (74.4%) and healthcare (69.2%). Environmental protection and the new energy industry will be the most attractive sectors for foreign VC/PE firms, followed by consumer products and services, and healthcare. Additionally, education/training, traditional manufacturing and the Internet will also be attractive to foreign VC/PEs.
