Opening keynote address
Chinese private equity - investing in a changing landscape
Following a strong year of private equity in 2021, a combination of geopolitical tensions, regulatory concerns and slowing economic growth has led to a perfect storm in the region. From both a fundraising and capital deployment standpoint, activity has slowed down as GPs and LPs alike take a wait-and-see stance on investments. With challenges, however, undoubtedly arise opportunities, and experts believe that Chinese private equity will be on the rebound in the second half of 2022, with expected pent-up demand and increased business confidence in due course. Our panel of seasoned private equity managers unpick the activities of the past year and discuss what lies ahead for the market.
- What macro challenges continue to affect dealmaking in China?
- How have regional GPs adapted to the challenges brought by 2022, and where can managers find opportunities in today’s market?
- Which sectors are still showing growth and potential?
- What are GP’s expectations for the year ahead?
Value creation: looking at the long-term opportunity
During turbulent times, private equity investors are unable to rely on increasing multiples and market growth to achieve strong returns, and therefore, GPs will have to take a more comprehensive approach towards developing due diligence and value creation plans to weather the economic storms. For GPs in China, this could be a crucial factor in terms of differentiating between stronger and weaker funds as the region recovers. Our panel of top GPs will discuss how effective value creation can help to set them apart from the competition.
- How have the recent geopolitical and economic issues impacted value creation in China, and have priorities shifted?
- What are the most important considerations for Chinese GPs when driving value creation?
- How is technology impacting value creation in China?
- Are top GPs incorporating more ESG criteria into their due diligence and value creation plans?
Technology – the shift towards deep-tech innovations
In light of increased policy changes and regulatory crackdowns in the technology space in China, venture capitalists and GPs are moving away from the traditional consumer internet sector and shifting towards the deep-tech industry, favouring sub-sectors that align with state policies, help to resolve supply chain bottlenecks and have large commercial demand, such as semiconductors, software and robotics. Whilst the pace of investments has slowed down, high quality deals are still being pursued, and opportunities are present for those with deep pockets and a track record of good past performance. Our leading panel of top experts will discuss the opportunity set.
- What are the main factors behind the transition of popular sectors in the tech space towards deep-tech, hard-tech?
- Will policy changes continue to affect the sector?
- Early stage vs late stage - where are the opportunities and how is investor appetite changing?
- What are some emerging investment themes on the horizon?
Sector focus: Consumer – the evolving opportunity
In 2021, China’s early recovery from the first wave of COVID-19 led to a huge demand in the consumer sector, particular in consumer-technology businesses. 2022 has seen a different story, with increased regulations and uncertainty over overseas listings leading to a change in market conditions, with investors retreating from brands and valuations adjusting as a result. Despite this, opportunities remain, and companies that demonstrate long-term growth potential and offer differentiated products and services are still seen as viable investments. Our sector experts will discuss:
- Have recent market adjustments and lower valuations led to less competition in the consumer sector?
- Where are investors currently seeking opportunities in the consumer space?
- Going global - has there been an increasingly growing trend of Chinese companies leveraging supply chains to expand overseas?
- What is the outlook for this sector for the rest of 2022 and beyond?
The rise of ESG, cleantech and carbon neutrality in China
Chinese GPs and LPs alike have been placing more emphasis on ESG and sustainable investing in the past year, driven by the government’s strong stance towards carbon neutrality and achieving net-zero targets. Firms have been incorporating ESG criteria into their due diligence and value creation playbooks, whilst a number of GPs have been collaborating with strategic partners to launch carbon neutrality funds, and investments in green innovations such as cleantech and green-tech are on the rise. Our panel of ESG and sustainability experts discuss the growth in this sector.
- What has prompted the increased popularity of sustainability strategies and carbon neutrality funds amongst local GPs?
- What sub-sectors of cleantech and green-tech are attracting investment, such as energy supply and storage?
- Walking the walk: how are GPs ensuring that their own firms and portfolio companies are ESG compliant?
- Where are most attractive opportunities, and how will the cleantech market change in the next few years?
Sector focus: capturing innovations in healthcare
Like many sectors in 2021, healthcare in China witnessed a large correction in in resulting from a series of regulatory measures implemented by the government. The long-term importance and defensibility of this sector, however, has meant that private equity and venture capital GPs continue to invest in areas such as innovative medications in the pharmaceutical sector and biotechnology startups. Our panel of healthcare experts will assess the industry outlook and provide their predictions for the next 12 months.
- How have private equity and venture capital investments in healthcare fared in the past year, and where are the continued opportunities in the sector?
- Will policy regulatory changes continue to affect dealmaking in the sector?
- What are some potential sub-sectors that investors should be on the lookout for?
- How is technology and emerging innovations bringing about change in the sector?
End of Day 1
Exits - finding liquidity
Exit activity has slowed down significantly in the first half of 2022, and the closing of the US IPO channel for Chinese companies has meant that alternative exit channels such as delistings and trade sales are being considered. However, once market conditions start to recover, exits may quickly bounce back, with secondaries keen to offer liquidity solutions to GPs. Our panelists predict the exit outlook for 2022 and beyond.
- How are GPs and LPs looking at exits and generating liquidity during uncertain times?
- What are some alternative exit channels to the US IPO market that are gaining traction?
- How is the secondaries market in China evolving?
- Will Hong Kong benefit from delistings in the US?
Accessing opportunities in the Chinese private credit market
While most private credit activity worldwide has been centred in North America and Europe, the Chinese market has no shortage of opportunities for those with on-the-ground knowledge and are willing to withstand current headwinds. In particular, China’s NPL market as well as distressed and special situation opportunities in the real estate sector are on the rise, and with banks subject to stricter lending guidelines, Chinese companies are increasingly turning to private credit managers. Our panel of experts will assess the opportunities and sectors in this market.
- What is the current opportunity set in Chinese private credit?
- How are managers tackling the challenges in the Chinese private credit market?
- How are current regulations and restrictions affecting foreign investment into the market?
- How will China’s private credit market change in the next 12 months?
LP views on China: looking forward
Given the recent regulatory and economic uncertainties in the region, it comes as no surprise that LP sentiment towards the Chinese private equity and venture capital market has been impacted. Whilst some LPs continue to do re-ups into existing managers as well as seize the market cycle opportunity, others are more hesitant to invest in new managers and are taking a “wait and see” approach towards allocating capital in the region. Our panel of global investors will take stock of the current situation and discuss their strategies towards the region.
- How has LP sentiment towards China been affected in the near term, and what are the main factor that continue to persist?
- For those LPs that have continued to allocate capital into the region, what have been the main opportunities they are targeting?
- Are LPs expecting more from their GPs given the current climate?
- How do global LPs view the Chinese private equity and venture capital market in the long term and will their investment strategies change?
End of Day 2
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