The golden decade: The Chinese characteristics of PE/VC

21st Century Economic Report Sheng Shanghai report "If compared with the United States, the United States is now a 45-year-old in the prime of the people, China is a toddler."　　"Oriental Rich Sea chairman Chen Wei once described the gap between China and the PE/VC industry."　　From an age perspective, that's true. The development of VC/PE industry in Europe and America can be traced back to the 40 's, in China, in 1998, during the ninth session of the CPPCC, Siwei, on behalf of the Democratic People's Republic, submitted the proposal for the development of venture capital in China as soon as possible, which is considered to have sparked a new upsurge in High-tech industry.　　Thus, the domestic upsurge of PE/VC investment.　　However, in a short span of 10 years, the domestic PE/VC industry out of a quite "Chinese characteristics" of the road, even in some respects also shows the European and American countries need decades to achieve the situation.　　Feature One: "10 quantitative change" according to the data of the Qing Branch, from 2000 to 2010, "golden Decade", no matter from the investment institutions, the amount of funds raised, investment, the number of cases of withdrawal, etc., are showing a trend of galloping.　　In the decade, the number of domestic investment institutions continued to rise, in 2000, the domestic active investment institutions reached 100, the number is 10 times times 1995; 5 years later, the activity in the domestic VC sector surged to 500, 2010 is to reach 1500. Take the United States as an example.　　According to the American Venture Capital Association, as of the end of 2007, the number of active investment institutions in the United States was 1019, 2008 also decreased by 13%, to 882. 2001-2009, regardless of the total amount of funds raised, the number of investment cases or the number of IPO exit, it shows a rapid growth trend. According to the statistics of the Qing branch, in 2001-2009 years, the total amount of funds raised in the country increased from 1.316 billion to 18.814 billion dollars annually, the compound growth rate was 39.4%, and the number of investment cases rose from 216 to 594, and the annual compound growth rate was 13.5%; 2001,　　The number of IPO exits was 21, increased to 77 in 2009 and an annual compound growth rate of 29.7%. From the annual total investment, 10 years, China's VC market compared to Europe and the United States, especially in the economic downturn, "the scenery here alone."　　In 2002, investment in China's VC market amounted to 420 million U.S. dollars, and 2009 to 2.7 billion U.S. dollars, an increase of 546.1%. Take the 2008 financial crisis as an example. A report by Dow Jones VentureSource, a leading US market-research firm, showed that U.S. risk investment was $28.8 billion trillion during 2008, with UK venture capital falling 24% from 2009 to $1.9 billion, and France falling by 29% per cent,　　Fell to $1 billion trillion, while China grew by about 50% per cent year-on-year, to $4.2 billion trillion. 2010, noOn whether to raise capital or to withdraw from the IPO, China's private equity market has "played 10 years of the strongest voice", and the world's eyebrows.　　According to the data of the Qing division, 2010 years ago 11 months, a total of 74 investment in mainland China's private equity fund to complete the collection, the number of funds reached the highest record in 4 years, the total amount of fundraising is 2.04 times times the level of last year, to reach 26.409 billion U.S. dollars. and 2010 years ago 11 months, a total of 191 Chinese enterprises supported by PE/VC listed in the domestic and foreign markets, a total of 33.125 billion U.S. dollars, the year 2009, the number of listed increased by 114,　　Financing increased by 1.12 times-fold, in the same period, in the Qing section of the 13 foreign markets and 3 domestic markets, a total of 678 companies listed, only Chinese companies have 416, about the other countries, about 1.59 times times the total number of IPOs. In fact, the growth of PE/VC in China over the past 10 years is positively correlated with the growth of China's economy.　　In the past 10 years, China's annual GDP growth rate of 10%, and these 10 years, China's venture investment industry, the annual composite growth rate reached 12.4%.　　Feature two: Investment stage "before light weight" according to the Qing branch of the 2010 China venture capital institutions list of 50 strong, only the top ten institutions as an example, deep-venture investment, Sequoia Capital, IDG, Fortune Venture, with Albert, Lenovo investment, and so on, basically covered the early, middle and late projects. Among the local institutions, the layout of deep venture investment in the growth, maturation and start-up stage is probably 6:2:2; Fortune will be a long-term project in 70%-80%,10%-15% as Pre-ipo and the rest as early in the year.　　Dongfangfuhai invested 40% in long-term projects, 40% in maturity and the remaining 20% on early projects.　　In foreign institutions, IDG covers all stages of start-up, growth, maturity and Pre-ipo, and Sequoia China's founding partner, Shen, also made clear that today's Sequoia China, "indeed is not a VC Fund, but VC and PE two products are very active."　　As early as May 2007, Sequoia entered China 2 years later, to complete the Sequoia Capital China Growth Fund I raise, the scale of 500 million U.S. dollars.　　The expansion of the scope of investment from the early to take into account the late PE project, "Sequoia the United States took about 25 years to take the same step," Sequoia China only spent 2 years.　　In Haitao Jin, chairman of the Deep venture, "venture investment on the start-up of the enterprise is an ideal state", he believes that if the light investment start-up period of the Enterprise, first LP on the GP's trust is not enough, distance success too far, GP himself will be more do not have confidence, secondly, must invest some mature enterprises, to give LP confidence. From the nature of capital profit, a local VC believes that when the market there are "red apple", we do not want to eat "green apple" is very naturalOf。 For the status of VC PE, 360 chairman Zhou Hongyi have their own views. Taking the Chinese Internet as an example, he said, "the whole entrepreneurial environment is deteriorating", first, the cost is different in the United States, investment in an early project may be 100,000 U.S. dollars, but in China, 100,000 dollars may not be able to do it, "loan costs, human costs, promotion costs and so far higher than the United States; Early projects are less rewarding than late projects, and the existence of some monopolistic companies makes it hard for startups to grow.　　Therefore, Zhou Hongyi that "this situation do not blame VC PE".　　The investment phase of the delay, but also make the growth and maturity of the project competition, and even led to some GP to start a nationwide network layout, to do the way of FMCG investment. Features three: "Curve growth" of merger and Acquisition Fund in 2003, the establishment of Hong Yi investment marked the gradual rise of local mergers and acquisitions fund, while in the world, the Acquisition fund first appeared in the middle of 20th century in the United States, then expanded to Europe and Japan market.　　In the 1980s, the fourth wave of mergers and acquisitions in the United States and 2003-2007, mergers and acquisitions funds have been unprecedented development. In the Chinese market, the reform of state-owned enterprises at the end of 20th century provided a large number of targets for the market, and the introduction of regulations such as "foreign-funded enterprises law" also eased the investment restrictions of foreign capital in China, so the Foreign Acquisition Fund took the opportunity to flood into China.　　In particular, after 2004 years, buy-out funds have developed rapidly in China. In June 2004, for example, Xinqiao Capital acquired a 17.89% per cent stake in 1.253 billion yuan, becoming the first typical case of a merger fund in China.　　December 2007, the Magnolia officinalis Fund was established, the excess raise to 2.5 billion U.S. dollars, positioning in the Chinese enterprise mergers and acquisitions reorganization field. According to the data of the Qing branch, in 2006-2009, a total of 36 mergers and acquisitions funds for the Chinese market completed, the total size reached 40.674 billion U.S. dollars.　　But from the ratio, in 2009, the Chinese market raised private equity funds (including venture capital funds) amounted to 101, the acquisition fund accounted for only 3%; private equity funds (including venture capital funds) raise the total amount of 9.248 billion U.S. dollars, mergers and acquisitions funds accounted for only 24.9%, "a relatively low proportion." Since the onset of the financial crisis, the Fund's overseas sources of funds have been limited, and the development momentum in the domestic market has slowed.　　This is just one of the "hurdles" in the Chinese market for buy-out funds. "The typical characteristic of a merger fund is the transfer of the controlling power of the operating Enterprise", Hony Capital, the head of investment in Hong Yi, said that China's private enterprises are still in the first generation of entrepreneurial stage, and China's private entrepreneurs a common feature is that no matter what the origin, as long as they are hard to fight out, all hope that the son of his father, therefore,　　They are unwilling to cede control of the company. Therefore, at present stage, "merger fund main Market or state-owned enterprise reform". But Hony Capital said that the current market is the remaining target is "large-scale state-owned enterprises", small funds do not have the strength to doMergers and acquisitions, both the strength and ability of foreign funds are often "acclimatized": foreign funds control norms, strict, but this is based on the integrity of foreign countries, legal environment, and domestic business ecological difference is huge. Carlyle's mergers and acquisitions in China have encountered obstacles. Carlyle announced in 2005 that it would buy 85% per cent of Xugong's shares in 375 million dollars, but after 3 years of hard work, the deal was not made.　　In addition to Xugong, Carlyle's investment in state-owned enterprises such as Guangdong Development Bank, Chongqing City Commercial Bank and Shandong Haitian has not been achieved.　　From the Carlyle Group's Fund category, the buy-out fund occupies a 69% share, the Growth fund is the smallest, accounting for more than 6%, Carlyle initially in China's mergers and acquisitions in the hope of acquiring a controlling power. From the takeover of Xugong failed, Carlyle began to rethink its localization strategy.　　"In the short term, mergers and acquisitions are not in the mainstream in Asia, and minority investment is the Asian model," X.D., co-head of Carlyle Asia Fund, said, "because there is no seller's market."　　Carlyle has "made a lot of minority equity Investments" since 2006, and Carlyle has been increasingly focused on investing in private enterprises, starting with the Carlyle Asia Fund number second. Features four: Investment coverage industry diversification from the industry to look at, in the United States, investment institutions are mainly concentrated in High-tech industries, such as it, the Internet, the proportion of about 60% to 70%.　　However, the current proportion of investment in medical health and bioengineering is on the rise.　　But in China, investment institutions that focus only on one area have become "scarce", and VCs like to look for opportunities in a wider range of areas.　　In the United States, Sequoia is still focused on it and Internet-related areas, and in China, from technology and media to consumer goods and modern services, health industry, energy and environmental protection. and Carlyle.　　In China, Carlyle is seen from finance, manufacturing to domestic demand and service industries, as Rubinstein says, "Diversified investment can give us insight into opportunities in the investment field." "It's based on two different countries," Sequoia Capital partner Michael Moritz that in the United States, the rapid growth of the industry is mainly concentrated in the technology-related areas, and some relatively traditional industries, itself has been more mature, not too many opportunities for rapid growth, but China is different,　　There are a lot of fast growing industries.　　According to the report of the Qing section, 2000, the broad it field of investment cases accounted for nearly 70% of the year, the next few years, 2001-2004 3 years, are under 60%, 2005-2009, except for 2005 years, are lower than 50%, and the trend of declining year by decade.　　In addition to the broad it,vc/pe also more and more involved in consumption, modern services, cultural media, health care, energy conservation and environmental protection, agriculture, advanced manufacturing and many other fields, the key is that there are already institutions in these areas are also making a pot full. Like Dr. Frog. September 2010, China Children's consumer goods development and retailer Dr Frog LandingHKEx, offering an IPO price of HK $4.98, Rose 51% on the first day of IPO. It has been quite popular in roadshow and public offerings, has received 485.47 times times oversubscribed, frozen HK $120.881 billion, and became the Hong Kong market's largest share of capital freeze since 2010. Behind this, Zhi Xin Capital became a big winner, in 2008, its tens of millions of dollars to invest in Dr Frog.