Private equity outlook for China: managers, politics and liquidity

With SuperReturn China 2018 fast approaching, we take you through the key discussions that will be taking place at the event, and reveal what is on everyone’s minds when looking East.

Manager selection and differentiation

Manager selection remains a key question for LPs targeting Chinese  private equity (PE) and venture capital (VC) investments, especially those coming into the space for the first time. LPs need to know whether the market conditions are right for strategies that have outperformed in the past to continue doing so, or if managers need to innovate more. Transparency is an issue that spans the entire investment universe and one that we are addressing during a panel with both LP and GP perspectives from the likes of the IFC, Development Bank of Japan and Cambridge Associates on how transparency feeds into an LP/GP relationship, especially during the due diligence process.

Specifically, on VC, the question marks lie around differentiation at both a fund and a deal level – at a fund level, what is the real role of a VC in China today? And how can LPs truly assess the capabilities of a VC to add value through their operational experience and networks? At a deal level, a crowded market in many key verticals has led to some scepticism from investors, and there is a need for clarity on how winners are picked in these markets, and on the potential commercial applications of nascent tech verticals such as AI, robotics and cryptocurrency in China.

China’s shifting domestic and international political stance

The last 12 months have seen some real changes in China’s political landscape, not least amendments to China’s constitution with respect to the position of President Xi, and the continued development of the Belt and Road Initiative.

With a number of keynote addresses during the main conference addressing change in the economic, political and social realities in China, SuperReturn China covers all the bases for those wishing to hear a variety of views on both the Chinese and global observations on these developments. Hear from:

• Professor Christopher Balding, Associate Professor at Peking University HSBC Business School on economic, social and political developments in China.
• Paul Haenle, Director at the Carnegie-Tsinghua Centre for Global Policy on the strategic implications and impact of the Belt and Road Initiative.
• David Kelly, Research Director at China Policy, on China’s aims and role in global geopolitics in a new era.

Shifting routes to liquidity

Liquidity is the primary concern for many investors in PE and VC – all are aware of the potential for the asset class to outperform, but also painfully aware of the need for liquidity conditions to be appropriate in order for funds to be returned to investors on time. After all, a portfolio is only as valuable as the price a buyer is willing to pay for a particular asset.

There has been an increasing focus of discussions around secondary activity in this space, with funds looking to snap up assets being managed by other GPs who are nearing their liquidity horizons and need to exit. Also, part of the discussions are fund restructurings, a topic of great interest to many investors and fund managers who are seeing valuable portfolios remaining unrealised in funds coming towards the end of their lives.

Liquidity is a major feature of our agenda this year, with investor perspectives from Unigestion and Ping An Capital coming during the Fundraising & LP/GP Relations summit, and a panel of firms targeting secondary opportunities in China including TR Capital and Foundation Private Equity taking the stage during Day 2. We’re also covering more traditional exit routes with representatives of The Carlyle Group, Standard Chartered Private Equity and more discussing their recent experiences in exiting investments in China.

2018 is shaping up to be another great year for SuperReturn China, bringing the best of the Chinese private equity community together with representatives of major international private equity houses and LPs with a global remit. We look forward to meeting you all in Beijing.