Australian Market Prospects

AVCJ Private Equity & Venture Forum 2010 Japan 21 - 22 April 2010 AVCJ Private Equity & Venture Forum 2010 Conference series ASIAN VENTURE CAPITAL JOURNAL

Asia’s Private Equity News Source avcj.com March 2 2010 Volume 23 Number 8

Editor’s Viewpoint SWFs in AIA Pru-ve power shift Page 3 PRIVATE EQUITY ASIA News Private equity and VC news of the week, with Bain Capital, ChrysCapital, Hony Capital, Macquarie, Morgan Stanley, Providence, Neuberger Berman, Spring Capital Page 5 M&A ASIA Deals of the Week Unison Capital to acquire MK for real estate Page 12 fundraising report Carlyle partners Australian market with Fosun for JV, RMB fund Page 14 prospects: Clear Industry Q&A Industry Q&A: Andrew Legge, Dragon Capital Page 15 roads ahead? AVCJ Research Private Equity Data File Investment opportunities in an uneven economy: Part 2 Page 10 Page 16

ANZ mezzanine special Fundraising Report Australia: Fundraising Q&A: Ripe for Simon Hua, mezz BOCOM Mezzanine may increase its presence International in Australia, but not overnight Page 8 Page 13 Japan 2010 AVCJ Private Equity & Venture Forum 21 – 22 April 2010 Global perspective, local opportunities

Japan Private Equity: Riding a new wave of confidence? ANA InterContinental, Tokyo

Confirmed speakers include:

KEYNOTE SPEAKERS SENIOR INDUSTRY PROFESSIONALS

Nobuyuki Idei Tetsutaro Muraki Haruyasu Asakura Philip Bilden Hiromichi Mizuno Richard Folsom Tatsuo Kawasaki Masato Marumo Founder & CEO President & CEO Chief Operating Officer Managing Director Partner Representative Partner Partner Managing Director QUANTUM LEAPS TOKYO AIM Innovation Network HARBOURVEST PARTNERS COLLER CAPITAL ADVANTAGE UNISON CAPITAL THE CARLYLE GROUP CORPORATION Corporation of Japan (ASIA) LIMITED LIMITED PARTNERS, LLP

Jun Tsusaka Masa Yoshizawa Masahiko Ishida Kazushige Kobayashi Motoya Kitamura Togo Okonogi Joseph W. Ferrigno III Tomotaka Goji Partner Representative General Manager, Fund President & CEO Associate Director & Manager, Investment Managing Partner Managing Partner TPG CAPITAL Director & Partner Investment Group ALTERNATIVE Sr. Vice President Department ASIA MEZZANINE THE UNIVERSITY THE LONGREACH DEVELOPMENT BANK INVESTMENT CAPITAL LTD MACQUARIE FUNDS NIPPONKOA CAPITAL GROUP OF TOKYO EDGE GROUP OF JAPAN GROUP INSURANCE CAPITAL

www.avcjjapan.com for the latest confirmed speakers and programme updates

Soichi Kariyazono Anthony Miller Ashok Roy Yoshiyuki Shibusawa Joe Zhou Partner President & CEO Managing Director Director Founder & GLOBIS CAPITAL PACIFIC ALLIANCE DAIWA QUANTUM JAFCO COMPANY Managing Partner PARTNERS JAPAN LIMITED CAPITAL JAPAN KEYTONE VENTURES

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International newspaper & news website Supporting organisation Knowledge partner Organised by

Contact Anil Nathani \ T: +(852) 3411 4938 \ E: [email protected] Editor’s Viewpoint [email protected] ASIAN VENTURE CAPITAL JOURNAL

Managing Editor Paul Mackintosh (852) 3411 4909 PRIVATE EQUITSeniorY Editor ASIA Brian McLeod (1) 604 215 1416 Associate Editors Maya Ando (852) 3411 4908 Christina Kautzky (852) 3411 4906 Creative Director SWFs in AIA Dicky Tang M&A ASIA Designers Mansfield Hor, ManYee Mak, Virginia Ho

Chief Representative, Beijing Pru-ve power shift Ying Jiang (86)10 5869 1196 Research Manager Helen Lee Research Associates Alfred Lam, Tweety Lau, Kenny Hung Circulation Manager Sally Yip A deal hailed as a once-in-a-lifetime Either way, a deal likely to kick life back into Senior Account Manager event looks about to put headline numbers Asia’s M&A market and reward underwriters Gareth Wilde against international appetite for Asian growth. Credit Suisse, HSBC, and JPMorgan Cazenove, Sales Coordinator Debbie Koo The UK’s Prudential, itself only worth some $23.3 also demonstrates the burgeoning power of Senior Manager, Delegate Sales billion but already claiming to be the leading Asian SWFs, backed by the same Asian growth Anil Nathani European life insurer in Asia, as it offers up to that the Pru seeks to tap. Temasek’s $703 million Marketing Manager $35.5 billion for American International Group’s triple-A-rated bond issue underlines the SWFs’ Edward Ma Marketing Communications Manager trophy AIA Asian network of over 320,000 agents range of funding options, and deep pockets. Joann Yip and 23 million policies, is showing just how much And CIC’s recent move into secondaries with Director, Business Development Asia’s macro story is worth to corporates anxious Pantheon, Lexington and Goldman Sachs, on Darryl Mag Conference Managers to diversify out of their topped-out, and now apparently favorable special terms, shows that Emily Mak, Matthew Swainson, Doris Chan struggling, Western core markets. Furthermore, the SWFs are ready to use their muscle to extract Conference Administrator Asia’s sovereign wealth funds, some already concessions from GPs. Amelie Poon Conference Coordinator anchor investors in the Pru, are reportedly lining And all this comes as the California Public Fiona Keung, Belinda Kwong up to bankroll the – fully underwritten – $20 Employees’ Retirement System (CalPERS) billion rights issue to support the deal. One SWF faces cutting its target overall rate of return Publisher & General Manager is apparently ready to take up around $5 billion of from 7.75% p.a. CalPERS itself is apparently no Allen Lee Managing Director the share sale. stranger to securing special provisions and terms Jonathon Whiteley The rights issue doesn’t give guaranteed from those it chooses to support. But overall, Vice President, Administration access to the SWFs, who will only take up the with the leading Western LPs of yesteryear in Harmony Heung tranches that existing Pru shareholders pass on. such difficulties, it’s clear that a new breed of Chairman Emeritus Dan Schwartz All the same, the certainty that the SWF appetite institutions is going to dominate the private provides clearly matters in the final resolution equity landscape in Asia and beyond in future. of the deal, and might have helped trim the Whether these are pension funds like Canada Incisive Media 20th Floor, fall in Pru’s stock that greeted the plan to 12%. Pension Plan Investment Board doing huge direct Tower 2, Admiralty Centre 18 Harcourt Road, The SWFs are reported to be eager to invest investment deals in Australia, or state-connected Admiralty, Hong Kong closer to their home ground after conspicuous groups like CIC, these giants appear to have T. (852) 3411-4900 F. (852) 3411-4999 losses in Western-directed post-crisis financial more cohesion, confidence and firepower than E. [email protected] investments. Indeed, an SWF consortium was the Western investment groups of hold, and URL. avcj.com being touted as a possible rival bidder to the Pru also appear ready to be more pro-active and Beijing Representative Office in the runup to the deal. demanding. Room 1805, Building 10, Jianwai SOHO, 39 East 3rd-Ring Road, Temasek Holdings, whose $5.9 billion Private equity GPs may have to deal with Chaoyang District, Beijing 100 022, China investment in Merrill Lynch in 2008 could have these institutions as tough-minded LPs. They T. (86) 10-5869-6205 lost up to $2 billion by some calculations, and may have to face off with them as, at best, F. (86) 10-5869-7461 E. [email protected] the Government of Singapore Investment co-investors, or alternatively, powerful direct Corporation (GIC), which apparently also saw competitors in deals. In any case, they may The Publisher reserves all rights herein. Reproduction in whole or very uneven performance from its $18 billion of simply have to live with just how far the balance in part is permitted only with the written consent of AVCJ Group Limited. AVCJ Weekly is delivered in QuVu format, which is licensed post-crisis investments into UBS and Citigroup, of power has shifted towards these institutions from and used by permission of Qiosk.com, INC. are both likely beneficiaries. Meanwhile, the post the crisis. ISSN 1817-1648 Copyright © 2010 China Investment Corporation (CIC) is a likely participant, and its $146.5 billion sister organization the National Social Security Fund Paul Mackintosh (NSSF) may move on its plan to invest up to 20% Managing Editor of its assets overseas. Asian Venture Capital Journal Cover picture: A Transurban toll road, now owned by CPP IB after a blockbuster M&A deal

Number 8 | Volume 23 | March 2 2010 | avcj.com Contact Allen Lee T: +(852) 3411 4966 / 3411 4945 E: [email protected] W: www.avcj.com

AVCJ Private Equity & Venture Forum 2010 Conference series Global perspective, local opportunities

AVCJ Private Equity & Venture Forum \ Australia & New Zealand 3-5 March \ Sydney DownloaD to CalenDar

AVCJ Private Equity & Venture Forum \ Japan 21-22 April \ Tokyo DownloaD to CalenDar

AVCJ Private Equity & Venture Forum \ China 27-28 May \ Beijing DownloaD to CalenDar

AVCJ Private Equity & Venture Forum \ USA 24 June \ New York DownloaD to CalenDar

AVCJ Forum: Asia’s Private Equity Week 9-12 November \ Hong Kong DownloaD to CalenDar

AVCJ Private Equity & Venture Forum \ India 2-3 December \ Mumbai DownloaD to CalenDar

Infrastructure Finance & Development Asia \ India 26-27 August \ New Delhi DownloaD to CalenDar News

AIG Nan Shan deal Hony invests China 2.9% for a 13% return. Total proceeds still in the dark Golden for Xian for the private equity investors were some $30 million. Though short of Taiwan’s foreign investment department stores its $815 million target valuation, regulator reportedly is still facing PRC buyout firmHony Capital is Hathway Cable still achieved a total discussions in parliament over the investing into HKSE-listed China market cap of around $675 million, now-controversial $2.2 billion sale Golden Development Holdings making it India’s largest cable by American Insurance Group (AIG) through a convertible bond TV player by market value. News of its local Nan Shan Insurance issue, to support the company’s Corporation also owns a 20% stake subsidiary to China Strategic and buildout of its department store A Century Ginwa shopping mall in Xian in the company. Primus Financial. operations in Xian. Pre-IPO interest in the listing In October last year, the buying The three target businesses in the transaction, Ginwa Saigao, Ginwa was moderate, with analysts citing consortium reached an agreement Nandajie and Ginwa Tangrenjie, were all established in 2008-09 and operate recurrent quarterly net losses in the to buy the highly-regarded asset. department stores and shopping malls in the historic city of Xian. China company, poor sector dynamics, However, Taiwan’s Investment Golden has operated the Century Ginwa brand in China for some years, and several court cases still in progress, Commission did not immediately the three entities’ absorption is the latest in a series of similar deals by China a price allowing little upside, and a approve the deal due to concerns Golden, which is now bringing in Hony as an investor to improve its working flotation geared primarily towards over possible PRC mainland- capital and provide additional investment expertise. The investment will returning money to its investors. The sourced funding of some of be made from Hony’s $1.4 billion 2008 Hony Capital Fund, and the exact listing was managed by Morgan the bidders. At the time, Robert amount and stake is as yet unconfirmed. Stanley, as well as Kotak Mahindra, Morse, chairman and CEO of Hong China Golden was first listed in Hong Kong in 2000 as I-Wood India Private Ltd. and UBS. Kong-based Primus and previously International Holdings, focusing primarily on wooden furniture one of Citigroup’s top investment manufacture, but has since apparently broadened its scope of business. Desai quits E&Y to banking professionals in Asia, Hony also reportedly recently invested a further $140 million into investee sought to assuage these concerns. Changsha Zoomlion Heavy Industry, a construction machinery company. raise ENAM infra The Investment Commission is now fund due to set up a special session with the Legislative Yuan in March, but The company completed court- outlets out of 118 in total in Asia, Jayesh Desai, hitherto senior has reportedly already said that it led rehabilitation proceedings the in a process managed by Goldman partner and National Director for questions whether China Strategic following year. The company will Sachs. Further sales of Hong Kong Infrastructure, Real Estate and is an appropriate investor for Nan now seek to expand through its ties and Japanese franchises are also Government at Ernst & Young Shan. with Marion’s shareholders. apparently in prospect. in India, is leaving E&Y to join Bain originally bought the brokerage and asset management Ant Capital will sell Bain may sell Outback Steakhouse chain in group ENAM, where he will launch November 2006 for some $3.2 an infrastructure fund. Honma Golf to PRC Outback Steakhouse billion, in partnership with Catterton The new venture, under the group in Korea, elsewhere Partners. The sale could yield some brokerage’s ultimate owner ENAM $200-300 million to help revitalize Holdings, will reportedly focus on Ant Capital Partners, the Japanese Bain Capital is reportedly in talks the parent group. broad infrastructure, including private equity firm, and Milestone to sell the successful Asia Pacific sub-sectors such as education and Turnaround Management, a operations of its investee company, Hathway Cable IPO healthcare. Target size for the fund Japanese business consulting Australian-themed restaurant chain is unconfirmed, but may be around firm specializing in turnaround Outback Steakhouse, with the sale disappoints for $500 million. The new vehicle will situations, will jointly sell their more of the Korean assets most advanced. ChrysCapital, MS be ENAM’s first substantial fund in than 50% stake in Honma Golf Co., the alternative asset space, where a privately-held golf equipment ChrysCapital Management and hitherto it had mainly operated as maker based in Tokyo, to Marion Morgan Stanley investee Hathway an intermediary and advisor. Desai Holdings, a PRC-invested group. Cable and Datacom Ltd. fell below was with E&Y for over ten years, Financial details were not its listing price by up to 9% on its previously serving as a VP at Coca- disclosed. The new shareholder debut on India’s National Stock Cola India. has been invested by Crest Group, Exchange, though the result was still a Beijing-based investment entity. moderately positive for the backers. Evercore buys Since its establishment in 1959, Outback Steakhouse in Seoul ChrysCapital shed some of its Homma Golf grew by developing 13.3% pre-IPO stake in the business Neuberger golf clubs and related equipment. Around 10 strategic and at IPO, ending with 6.4% and a 48% placement group However, its recent continuously financial bidders, including some return on its original May 2007 falling sales ended in a filing for private equity firms, are reportedly investment, while Morgan Stanley US boutique investment bank bankruptcy protection in 2005. seeking the chain’s 100 Korean took down its stake from 3.8% to Evercore Partners has announced

Number 8 | Volume 23 | March 2 2010 | avcj.com Asia has over $233 billion in funds under management

* as of September 30, 2009. Source: AVCJ

Just where and how are these funds distributed? Read all feature information on key companies and transactions. about it in AVCJ Private Equity and Venture Capital Report, the Offering global perspective alongside local opportunities, annual series of regional reports by the leading source of the regional reports include Australasia, China, India, information on Asian private equity, venture capital and M&A. Japan & Korea, and Southeast Asia.

Reviewing the year’s activity in the industry, the regional For more information or to order, call Sally Yip at +(852) reports are filled with up-to-date data and intelligence 3411 4921 or email AVCJsubscriptions@incisivemedia. on fundraising, investments, exits and M&A. They also com.

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09 reg reports_port.indd 3 24/2/10 10:36:40 News

the acquisition for an undisclosed Alibaba’s Ma plans to form fund JAFCO Head of North Asia Vincent sum of the Private Funds Placement Jack Ma, founder, chairman and CEO of Alibaba.com, one Chan, has announced a $184 Group of $173 billion asset manager of the largest B2B online marketplaces in China, and PRC million second close of its debut Neuberger Berman, formerly the celebrity netrepreneur, reportedly is planning to form a Spring Capital Asia Fund, plus asset management arm of Lehman $200 million VC fund for investing in Chinese companies. an investment in a wind power Brothers. The fund will focus on Internet businesses, consumer Jack Ma company in Shandong Province. Evercore said that the acquisition goods and renewable energy industries. Other prominent Spring was sole lead investor will help it broaden its asset PRC entrepreneurs reportedly linked with the fundraising plans were in the first round of funding for management business and other Shi Yuzhu, chairman of NYSE-listed Giant Interactive Group Inc., Yu Feng, Qingdao Wuxiao Group, a Jiaozhou- services, while the unit expands founder of Target Media Holdings Ltd., Wang Yusuo, chairman of ENN Group, based manufacturer of wind from its London and US bases and Shen Guojun, chairman of China Yintai Holdings Co., Ltd., and Wang Jianguo, and electricity towers, with an current eight professionals across founder of Five Star Appliance Co. Ltd. announced turnover of over $150 Europe and the Middle East, and No further details were reported but Ma is widely accepted as a potential million in 2009. possibly Asia. Evercore partnered VC supporter of rising Chinese SMEs. Since Ma founded Alibaba in 1999, he With offices last year with CITIC Securities to has repeatedly said that he faced difficulties getting financing from lenders in Hong Kong, explore cross-border investment for business expansion, adding that banks often refused to lend to SMEs Shanghai and banking opportunities, especially because of lack of corporate information. Suzhou, Spring involving China. Capital makes early stage MGPA first fund Internet search leader Baidu to in Australia’s Effective Measure, a growth capital Vincent Chan invest $50 million into a Hulu-like startup developer of measurement investments into wound up online video service. solutions for online audiences. lower mid-market PRC companies, Macquarie Global Property Baidu itself will commit around Effective Measure claims to targeting cleantech, healthcare, Advisors (MGPA), the private $10 million to the venture, which provide detailed information for consumer, and business services equity real estate investment group will provide licensed premium advertisers and other clients on sectors, among others. The firm launched by Australia’s Macquarie video content to users on an more than 97 million Internet users anticipates a final close for its fund has wound up its debut $480 advertising-supported basis, with in emerging markets, with offices around mid-2010, with a target of million Global Fund I, launched in Yu Gong, former president and in Melbourne, Dubai, Palo Alto, around $200 million. 1999 targeting Europe and Asia. COO of China Mobile’s 12580 video New York, London and Bangkok. The initial fund made 21 unit, as CEO of the new arm. The The company cites proprietary Wipro chairman investments in 12 countries, new company will use www.qiyi. technology able to deliver including office space in central com as its domain name. Baidu will “unmatched accuracy” in measuring backs Manipal Tokyo and luxury apartments in continue to be the majority owner site traffic, as well as considerable PremjiInvest, the $1 billion private Hong Kong. The fund has sold $5 of the new business. cost savings. David Carlick, venture equity vehicle backed by Wipro billion of assets on behalf of 15 Providence has also invested partner at Rho Ventures, will join Group chairman Azim Premji, institutional clients worldwide, Hulu, which pioneered this business Effective Measure’s board as part will invest some $43.3 million according to Macquarie. MGPA model in the US. “As the world’s of the deal. “We are excited to be for a significant minority stake in Global Fund I generated more than largest Chinese language internet involved with this talented team, Manipal Universal Education, the a 2x equity multiple, and delivered a search company and also the in this emerging set of markets,” corporate education arm of Manipal gross investment level internal rate dominant video search engine saidCarlick. “The global online Education and Medical Group. of return of 20%, according to the in China, Baidu has unmatched advertising business is growing PremjiInvest will join existing group. MGPA’s more unusual recent competitive advantages in its user rapidly, and Effective Measure investors Capital International and transactions include three Polish base and traffic,”Jonathan Nelson, is going to provide increasing IDFC Private Equity, who committed shopping malls, bought in January CEO of Providence, said publicly. validation and momentum for that respectively $40 million and $30 this year for $338 million paid from “The new venture will provide users growth in the markets we serve.” million to the company in 2006. its Europe Fund III. MGPA currently with a first-class viewing experience, Rho is currently investing from Proceeds will be used to fund an manages $11 billion in assets, and will work with regulators to its $150 million Rho Ventures VI ambitious expansion program, including development projects in ensure the lawful distribution of fund, and claims investments all including new academic facilities its target geographies. professionally produced media over the world. in Dubai and Antigua, dental and entertainment content on the education support in Malaysia, Providence internet.” Spring Capital and a further 500+ training centers across India. Manipal Group, the deal with Baidu Rho Ventures gets announces second foundation of doctor, educationalist, confirmed close, deal banker and reformer TMA Pai, Effective in Oz has grown into a multi-armed Leading TMT specialist investor New York and Palo Alto-based VC Spring Capital Asia, the international educational and Providence Equity Partners has investor Rho Ventures has made independent Greater China private healthcare group with both profit- reportedly sealed its deal with PRC a $4 million Series A investment equity firm formed by former driven and non-profit units.

Number 8 | Volume 23 | March 2 2010 | avcj.com ANZ Mezzaninie Special [email protected] Australia: Ripe for mezz Mezzanine may increase its presence in Australia, but not overnight

Australia is not what the Except for some of the larger LBOs, The effects of the global financial solve their balance sheet problems.” global mezzanine debt industry where mezzanine financing was crisis Stead explains that in the past, might consider a stand-out market. used to fill out the capital structure, Although Australia only saw one borrowers could push the banks for Traditionally, equity and senior most structures have been fairly quarter of negative growth and larger loans, but post-crisis this is debt have always reigned supreme, straightforward, with senior bank never slid into a recession – unlike not the case. “If you can get senior and convertible bonds have been debt and equity.” most of its developed counterparts debt, you probably would considered quite a sexy debt His colleague, Edward – by-products of the economic do [right now], but if you can’t and instrument. Cairns, Head of Restructuring at crisis have shown their faces in the alternative is equity, right now Gary Stead, Managing Director Clearwater, other ways. “A number of foreign that’s an expensive option. This and Co-Founder, Shearwater explains. “The banks are exiting or scaling back means there is a pool of people Capital, explains that mezzanine Australian in Australia,” explains Hillyer, “so the who have no real issues, but just suffers reputationally in Australia, market capacity to lend has been reduced, can’t get access to bank debt which has put many off. “From an didn’t take to not insubstantially.” and/or are being forced to put in investor perspective, people tend mezzanine Historically Australia has been more equity.” to think of it as risky because they financing with the “land of the equity cure” he While problems with mezzanine think, if the bank won’t [lend to the anything like says, noting that in a difficult – and realistically, all types of loans company], then the borrower must the gusto of Cameron Hillyer environment, corporate Australia – occurred when structures got too be borrowing too much, or there’s a the US and raised over A$80 billion ($72 billion) loose, “Now we’ve gone to a world problem. For borrowers, the view is Europe; something which looks in equity in 2009, and A$51 billion where credit is so restrictive, many that it’s expensive and they would like sound banking practice in ($46 billion) in 2008. “That said, of the deals restructured need a rather do something else.” hindsight. With different financial there is considerable refinancing layer of capital like mezzanine,” says But with bank lending dynamics, driven by their well- risk ahead, with A$44 billion ($40 Stead. considerably tighter – and capitalized – and prudentially billion) due to be refinanced in anecdotally, lending only to those regulated – big four ‘pillar’ banks, 2010 and 2011, and this may result Inevitable growth for mezzanine with whom they have long- they simply didn’t need to.” in companies looking at non- With opportunities for mezzanine standing relationships – and a Unlike in Europe, which has traditional forms of financing to to play an important role in dire need for restructuring on the recently witnessed a setback with horizon, Australian corporates the ruling on IMO Car Wash [see may be well-advised to reconsider sidebar], Cairns says there are no Working at the Car Wash their relationship with mezzanine real red flags when it comes to an debt. Australian view on mezzanine, “but Mezzanine debt recently made headlines in the UK, with potential ramifications for there is a lack of familiarity with the restructuring across Europe, by way of the IMO Car Wash ruling. A group of mezzanine Limited familiarity with mezzanine technique.” lenders attempted to oppose a scheme of arrangement for a restructuring plan that For a developed country, Australia’s Of those mezzanine deals would enable senior lenders history with mezzanine is in fact that did get done over the past and equity shareholders to quite few years, many were of the realize a debt-for-equity limited. variety termed ‘covenant-lite’. “This swap, and would leave the Cameron gives you limited ability to enforce mezzanine lenders with Hillyer, in a downturn,” explains Hillyer. virtually nothing. Chief “In the leveraged loan market as One of the main Financial a whole, covenant-lite deals grew arguments by the mezzanine Officer at to almost 19% of all bank debt groups was that, looking at Clearwater outstanding, from about 1% at the real value of the company, Capital, the beginning of 2006, so it’s not there was a realistic possibility explains: surprising to have seen an aversion that the value exceeded the IMO Car Wash in Australia “It’s a Gary Stead to this type of financing from some value of the senior debt. In the different investors. But, it does highlight end however, the High Court found that the mezzanine players “did not have a relevant market in Australia versus Europe. that there is a sophisticated market economic interest” and that the value of the company presently broke well below the In Australia, you haven’t historically there, that maybe just got too value of the senior debt. seen a lot of mezzanine financing. hot.”

avcj.com | March 2 2010 | Volume 23 | Number 8 ANZ Mezzaninie Special [email protected]

Australia’s Channel Nine, an asset of PBL Media, one of Australia’s biggest mezzanine financings to date the restructuring of Australian Cairns believes, “We’re starting is arguing that mezzanine will historically,” he says, “but now is part companies, Stead says that the list at such a relatively low base, there become the next big thing of the solution going forward.” of companies who stand to benefit has to be some room there [for overnight, Clearwater is seeing new “The whole market is changing is potentially quite long. mezzanine to grow]. It is a strong proposals in a few particular areas, in Australia,” concludes Cairns. “There are different classes of creditors’ rights jurisdiction with the including natural resources and “Historically it has been an companies facing refinancing,” rule of law, an independent and property development. insolvency-driven market; now it’s over the next few years, he says. competent judiciary; and real bench Stead is of the opinion that looking more restructuring-driven “Real estate and infrastructure are strength in professional advisors. some of the tainted views of than it was before. These things overleveraged sectors, but private Legally, Australia is a sophisticated mezzanine on the part of investors take time to change, but we see an equity is another, and companies jurisdiction. It would be the first have subsided as banks have important new trend developing with stretched balance sheets place [in the region] to see an become more restrictive with their here – one which we at Clearwater are another. That’s quite a large increase in activity.” lending policies. “Mezzanine no and others like us are keen to group.” While nobody in the industry doubt was part of the problem support.”

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Australian market prospects: Clear roads ahead? Investment opportunities in an uneven economy: Part 2 The convergence of a robust economy, a shortage of credit and the perceived retreat in public equity markets look likely to generate M&A and private equity deals; but for different reasons.

As noted in part one of But the number of transactions rose transactions (Canada Pension this survey last issue, a number of across the board. Plan Investment Board/Ontario factors look likely to boost merger Domestically, a total of $58.9 Teachers acquisition of Transurban and acquisition and private equity billion was transacted via 779 deals Group, and CPPIB’s separate buy activity in Australia and New (604 disclosed) in 2008 (all figures into Macquarie Communications Zealand. These include broad USD). A year later that figure had Infrastructure) had a heavy impact economic strength unsurpassed shrunk to $38.6 billion through on this outcome. Other inbound in the Western world, sound and 1,012 (765) deals. investments from China, Japan and solvent banks, and a still-plentiful Outbound aggregate deal Switzerland were much smaller. supply of pension fund money, value, by comparison, was pegged The main consensus, however, plus a credit supply-and-demand at $6.9 billion in 2008, from 144 is that a turning point for M&A may imbalance, and a slackening of last (116) transactions. And the value have been reached, with conditions year’s torrid public equity upsurge. slippage in 2009 was more modest, now pointing to more activity “Businesses And to some extent, the rebound is down to $5.6 billion via 161 (92) ahead. already under way. transactions. On the inbound side, which were in however, aggregate value nearly Recent M&A: solid, if not spectacular The metrics doubled – to $41.6 billion in 2009 UBS head of ANZ M&A, Anthony some form of First, by way of context, there’s no on the strength of 382 (312) deals, Sweetman, offers this perspective: distress have argument that the aggregate value compared to $25.1 billion from 270 “Last year, M&A activity was completely overshadowed largely survived – by the [public] equity raising and may now be activity, simply because it was so large. That said, available for though, if you actually look at the numbers, despite sale.” – David Wenger 2009 being markedly behind 2006 and 2007, these were blowout years. Lawyer David Wenger, partner But [activity] remained with leading Australian law firm above 2004 and 2005, which Allens Arthur Robinson (AAR), were pretty good years. In shares Sweetman’s positive view, other words, it has stayed and in fact is even more bullish: solid, if not spectacular.” “While M&A activity slowed However, caution noticeably, especially in the second remains, given the half of 2009, indications are that economic dislocation seen 2010 will see a rebound,” he told worldwide, because clearly AVCJ. “Companies are again starting no economy is an island in to focus on growth., and businesses today’s interlocked world which were in some form of distress CityLink near Melbourne in Australia, operated by Transurban markets. Moreover, the have largely survived – and may cheap and easy credit which now be available for sale. Banks are of ANZ M&A deals slipped year- (207) deals a year earlier. fuelled the boom times of 2006 and starting to lend again at reasonable on-year between 2008 and 2009, It must be noted, however, 2007 is unlikely to be replicated levels, and there is a sense that except in the inbound segment. that a brace of huge infrastructure anytime soon. those who move more quickly will

10 avcj.com | March 2 2010 | Volume 23 | Number 8 ANZ Macro special [email protected]

be rewarded. The only significant there are fewer opportunities there their portfolio companies and deals amounted to 1.1% or $185 constraint we see is the potential for Australian companies. refinancing risk to contend with. million, PIPE financings even less at mismatch between buyer and seller “Partly that’s because mainland What we’re seeing at present, $158.6 million, and turnaround and expectations. But that gap should China is very hard to invest in unless therefore, is the bears coming out restructuring activity amounting to narrow as business conditions of hibernation into the 2010 sun; $76.8 million and so forth. improve and leverage re-enters the meaning there are growing signs market.” of increased new deal origination Private equity areas of opportunity activity.” As to where activity is likely to be Best bets Lawyer David Wenger takes a concentrated, consensus is that As to where Wenger sees the action similar view: there is a growing line of private being hottest, he says that since “We see it taking some time for equity firms looking to divest assets, Australian companies have mostly the pre-GFC blockbuster deals to now that some calm has returned not experienced the distress levels re-emerge. So we expect middle- post-GFC. This is primarily due to seen in most other places, key M&A Facilities at Broadcast Australia, one market deals to dominate, though a number of portfolio companies opportunities are harder to discern. of the major holdings in CPP IB’s some large deals may happen in the having achieved anticipated But he reckons that resources and flagship purchase of MCIG resources and property sectors.” investment objectives, and the infrastructure will continue to weigh As to why, he also cites the potential availability of an ongoing significantly, along with a renewed you’re a big company; and frankly, current financial constraints in the IPO exit window, combined with interest in media, commercial a lot of the PRC companies are very Australian lending market plus the stronger corporate and financing property, mining services and retail. large by Australian standards.” fact that while Australian corporate confidence allowing M&A activity. Sweetman concurs on the As for the rest of Asia, it’s balance sheets are now generally From a new private equity ongoing strength in mining and case by case. But the bulk of stable, most companies are not investment standpoint, according resources, including the oil, gas and Aussie investments that end up sitting on significant excess cash. to Thompson, the flow will be coal segments. But that aside, he being made will likely be of the The problem with these to services enabling the fastest- characterizes Australian activity as partnership/JV type, or even predictions, from the point of view growing industries. So companies patchy. greenfield; but not buying existing of AVCJ data to year end 2009, is providing mining services again “You don’t tend to get areas businesses. have allure as commodity prices that are consistently strong, even firm; and for very different though they may look that way Private equity: marching to different reasons, so do those linked to for a year or two. That’s due to the drummers enabling sustainability. Many relatively small size of the economy On the private equity side, different clean/greentech businesses may and the limited number of players conditions and drivers are in play. benefit from ongoing stimulus and in most sectors,” he explains. Andrew Thompson, national head corporate sustainability strategies One promising development of private equity with KPMG, sums – and unlike many other sectors, is the various government up. this can only grow in future. privatizations under way in Australia “Large private equity firms Additionally, Gary Stead, co- at the moment. As examples, will continue to investigate large founder and managing director New South Wales is privatizing private equity opportunities,” he with Shearwater Capital in Sydney, some of its electricity assets, and told AVCJ. “But the reality is that, sees the provision of credit as a Queensland is doing the same as unless exceptional opportunities very attractive space in terms of regards port, toll road, forestry and come along, it’ll be very tough, delivering risk-adjusted returns. – substantial – rail assets. due to the improving but still “What we’re “For private equity, the challenge As well, Sweetman sees a difficult financing conditions, and will be, while multiples have come continuation of the cross-border the current backdrop of taxation seeing at present, down, what can they get in terms activity that was the main market uncertainty.” of leverage. The banks are still very driver over the first part of last year. “The middle market, on the therefore, is the tight on that. But you’d have to see That includes foreign interests other hand, is characterized by bears coming out them benefiting on the buyside, looking to acquire targets in returns that largely come from referencing again forced asset Australia, but also Australian buying well and growing the of hibernation disposals.” companies’ recovering appetites business, and not significantly from into the 2010 In other words, it’s a much- to invest overseas across a range leveraged-based, or structuring- changed private equity universe in of sectors; in the US and Europe based returns. Thus we see that sun.” – Andrew Thompson Australia, as in most other places. (despite economic issues there), segment as broadly unaffected by And a return to robust longer-term and to a lesser extent in China/Asia. difficulties in the financing markets.” growth remains uncertain, now that This may seem a little strange, given “And just as clearly, a lot of GPs that buyouts made up 97.6% of the benign credit markets – and the much-touted shift of the global have been appropriately cautious activity Down Under, with a total raging-bull equity markets – that economy’s center of gravity to the after the year they had last year, value pegged at $17.1 billion. By drove it are in abeyance for the region. But the simple reason is where they had real worries about contrast, expansion/growth capital foreseeable future.

Number 8 | Volume 23 | March 2 2010 | avcj.com 11 deals of the week [email protected]

Unison Capital to acquire MK for real estate Control stake in restructuring/asset business

Unison Capital, the Japanese buyout own capital and selling after it has increased unit of the parent, acquired in January 2009, to firm, will acquire a 61.3% stake in MK Capital their value. It also has strengths in distressed Daiwa House Industry, an Osaka-based property Management, a listed real estate-related finance asset management. Other business lines include developer, before Cosmos collapsed. It is too and asset management company, through a provision of mezzanine loans, financial advisory early to say if similar plans are in train at MK private placement of new shares due on April 5th services and real estate brokerage services. Capital. this year. In Japan, about JPY3.5 trillion ($39 billion) Indeed, MK Capital sees the current MK Capital said that it needs further capital of mortgage securities will be converted environment in real estate industry as a good to develop its debt restructuring business, and between 2009 and 2013, and some of them time for its investors to help strengthen the debt to form new funds to accumulate distressed will very likely fail to repay, and will become restructuring assets in Japan. Therefore, it decided on Unison distressed assets. The value of the total real business that as the best suitor, given the latter’s ostensible estate distressed asset pool in Japan is estimated it started to knowledge of management control and skills at around JPY125 billion ($1.4 billion) in total, operate last for executing business strategies to further the presenting a vast market for investors who target year, given the company’s growth. distressed space. current pricing The total amount paid for the majority stake However, questions surround the MK Capital gaps between in the company will be JPY2.5 billion ($27.7 deal. One LP source told AVCJ, “I am not sure sellers and million), to be paid from the Unison Capital I, that the LPs in Unison’s operating funds have buyers, which II and Unison Capital agreed on this acquisition, and I feel I should are thwarting Partners III funds. Ichirota question why they took a majority position in closes. Kato, CEO of MK Capital, this business, given its previous investment track Accelerating the will reduce his stake from record.” Other sources indicated that Unison restructuring 26.7% to 10.3 %, but MK has been consistently interested in real estate of the will remain listed on the and financing, adding that the distressed asset property asset An MK Capital-incubated asset Tokyo Stock Exchange’s market is very attractive. management in Shimokitazawa, Tokyo Mothers growth board. In 2005, Unison took a 61.7% stake in operations MK Capital Cosmos Initia, an apartment and residential would be also key to the company’s further Management was house developer, from its parent Recruit Co., growth, MK Capital said, adding that it has founded in 2001 by Ichirota Kato but the company later applied for Japan’s already acquired a considerable inventory of Kato, a former director Alternative Dispute Resolution bankruptcy deals in this space. It will primarily focus on JPY1- of Davinci Holdings, one of the largest property workout mechanism in April 2009. However, 5 billion ($11-56 million) deals for commercial, investors in Japan. The company is engaged in Unison, which has developed special tactics office and rental residential buildings in large asset management business that involves the for rebuilding troubled companies, was said to cities, such as Tokyo, Osaka and Nagoya. acquisition of real estate assets through special have secured its investment amount in Cosmos As a controlling shareholder, Unison will send investment vehicles, and asset incubation by Initia by selling off its stake in 100%-owned three external board directors and one external developing purchased property assets with its Cosmos Life, the property service management auditor to MK Capital.

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Fundraising Q&A: Simon Hua, BOCOM International Simon Hua, Managing Director and Head of Private Equity at BOCOM International Asset Management, a subsidiary of China’s Bank of Communications, speaks about the group’s new offshore fund.

Q: Please outline some of the This is the first fund from of investment banking. Also, Q: Do you have strong new fund’s characteristics. BOCOM International, so all the with this BOCOM and BOCOM preferences for sector focus, or A: This is our first private equity resources of BOCOM will be used International structure, we could are you pretty much open? direct investment fund, mostly to support this fund, in terms capture a lot of returns for our A: We are more focused on the focusing on offshore growth of originating deals, execution, investors. In terms of RMB funds growing consumer sectors in capital opportunities, mainly and providing various products and fund management, BOCOM China. Over the past couple of equity investments with to our investee companies. We International has a plan, but it years Chinese GDP was driven structured downside protections. have a lot of advantages over will be the next step. basically by investment, and the This is an offshore fund, and our foreign direct investment funds, On the Chinese stock central government realized it’s target will be focused on China who do not have an onshore exchanges, there are a lot of more important to help Chinese opportunities. The main exit will vehicle, or any platform to listings, and a lot of policies are people to spend, and to grow be via IPO listings in offshore help their investees on top of changing. It’s very uncertain. the consumer sectors in China. stock exchanges, and we expect the funds they have invested. Once you get invested into an There are a lot of opportunities in that the potential investee Compared with other onshore A-share-listed company, the the consumer sectors. companies would be listed in the Chinese direct investment funds, lockup will be three years. A lot We will look more specifically next 12-24 months. The majority we also have this very unique of things are very uncertain. into the healthcare sectors, will be Hong Kong-listed. bank system, providing different Although it’s very hot, we will the green energy sector, The fund size will be around products. A majority of Chinese wait and see the results of these infrastructure, high-speed railways $250 million to $500 million; it enterprises want to be allied funds, but sooner or later we will and other rapidly-growing depends on the final fundraising with the BOCOM brand and to consider that. consumer-related sectors. results. After the first closing, be able to leverage on BOCOM’s several fundraising agents platform. Q: How significant is BOCOM’s Q: Are you getting signs of have already been interested in financial role as an anchor really strong interest from contacting us. After the initial Q: What were the key reasons investor in the fund? international LPs? talks with potential investors, we for deciding to form an A: For the first closing, we got A: We don’t think it’s a very difficult have seen quite a few potential offshore vehicle, as opposed the investment of $52 million. task to do this fundraising. Some investors in Asia as well as the US to one of the RMB fund Half of it was from BOCOM of the US investors asked us to and Europe. We are expecting structures? international. Basically, it’s about make the fund size larger. We’re the majority of the fund will be A: RMB and offshore funds are 5-10% of the fund. It’s quite saying that we’ll see. raised out of Hong Kong and very different. This fund is a a big commitment. And the Asia. One third will be from the natural development after our other investors, some are the Q: Do you have many US and Europe years of development of our funds from the management opportunities you are ready to This is a fund run under investment banking business. team, some are the funds from invest in from Day One? the bigger platform of Bank Now we can provide our clients international investors. A: We have 5 to 10 solid investment of Communications, which is with underwriting, bridge loan opportunities. Some of them we one of the top five banks of products, to companies that Q: How important is it that already secured by our principal China. We have a very extensive are targeting to get listed in BOCOM is Shanghai- money. Some of them we are network in China, reaching out Hong Kong and offshore. In the headquartered and is at talking to very closely now, and all over China. We have first-hand past few years, we have been the center of the new legal if the fund is set up in time we’ll knowledge of those growing supporting these clients. developments in China? use fund money: if not, we’ll use companies in China. This forms a We see it’s a good time A: There are two sides of this: one is principal money. So it’s not like very good sourcing platform for to set up an offshore fund to offshore, the other is the policies we are not ready on Day One this fund. help grow the overall business and regulations. and don’t have investments.

Number 8 | Volume 23 | March 2 2010 | avcj.com 13 Fundraising report [email protected]

the maturity of private companies,” total ever – during 2008. adding that bringing together best “Competition has been Carlyle partners practice from East and West would increased with the hundreds of allow both parties to be more local private equity firms who raised competitive globally. funds last year,” Tsou said, adding with Fosun for JV, The new JV will expect to raise that there is a lack of professional a reasonable size fund without well-managed platforms that are rushing it. However, Tsou said that properly institutionalized. This is a the joint entity plans to make five commonly-heard complaint from RMB fund investments from its initial $100 experienced private equity players million. The fund is open to all in China lately. Co-investment, access advantages sectors, but the JV will look at the One non-Chinese Asian fund growth rate, leadership, market manager told AVCJ that it was quite The Carlyle Group has and CEO of Fosun, Liang Xinjun, share and possible potential of the surprising how much RMB capital signed a strategic partnership Wang Qunbin and Fan Wei. Five company when determining which Chinese institutions could raise for agreement with Fosun Group, the years after its formation, Fosun’s investments to make. their private equity funds. Another largest privately-owned investment founding members started selling Mutual synergies of industry mainland private equity player conglomerate in China, to enhance and buying property, enabling knowledge and investment remarked that there are many new their investment activities in the the company to buy state-owned strategies from both firms will LPs expecting to invest into private Greater China enterprises in China. As its strategies further buttress the JV’s strong equity in China. market. Both firms thrived, the group established potential for building strong Meanwhile, there was not a will jointly sponsor Fosun International in 2004 networks and deal sourcing, single case of overlap during the and manage an and listed the company on the according to Carlyle. Furthermore, past ten years between Carlyle and RMB fund for Hong Kong Stock Exchange. Fosun the partnership of two well-known Fosun, because the China market is investments into has invested in various industries brands will likely lure local LPs’ so big, said Tsou. Consequently, the high-growth PRC that benefit from China’s rapid attention for further fundraising. JV could increase the numbers of companies. The growth, including pharmaceuticals, deals there, he added. new JV fund has property development, steel, It should be noticed already had $100 mining, retail and services, with that Fosun has strong million injected by Guo its total value of assets under support from the Carlyle and Fosun, Guangchang, management exceeding $10 billion. Shanghai government, and both firms plan Chairman, One of its subsidiaries, SinoPharm which should help to make immediate Fosun Holdings, the most recent IPO from deal closing and investments. Aside International Fosun’s past investments, recently other administrative from the fund’s delivered a claimed IRR in excess of issues. PRC institutions initial capital, both companies 100%. and other incomers will look for co-investment This is not the first time that generally require strong opportunities with their existing Carlyle has partnered with a local government funds. Through partnership with a Chinese corporate giant in the connections to thrive. large local conglomerate, the fund mainland, where many companies “When in Rome, will ostensibly have easier access have been seeking private equity do as the Romans do.” to local investors, with immediate or VC capital rather than taking the A fundamental key benefits for further fundraising longer route of applying for funds for laying a strong activities. from lenders. Prior to this alliance, foundation in China is This global strategic alliance the two firms had already made to follow their business between Carlyle and Fosun as well a joint investment in Guangdong rules and bed down into as the JV RMB fund will be led by Yashili Group Co., Ltd., one of China’s the local culture, while Wayne Tsou, Managing Director largest infant formula companies, in keeping foreign firms’ and Head of Carlyle Asia Growth September last year. sophistication. Partners, who previously worked David M. with Warburg Pincus. Carlyle’s position Wayne Tsou Rubenstein, Carlyle Co- AVCJ asked Wayne Tsou about founder and Managing Fosun’s pedigree the significance of this JV, and he Funds and fundraising in the PRC Director, said of the deal, “China The counterparty of this alliance, replied: “Partnering up with a large According to AVCJ Research’s latest is one of the best places in the Fosun Group, was founded in 1994 private company in China means figures, just over $5.4 billion of world to invest. We expect to make by four university graduates from that it is time for China to globalize, private equity and VC funds were investments that benefit high- Fudan University, including Guo with corporates in general aspiring raised for China in 2009, compared growth companies and enhance Guangchang, the current Chairman to be global firms when looking at to over $14.4 billion – the highest the local private equity industry.”

14 avcj.com | March 2 2010 | Volume 23 | Number 8 INDUSTRY Q&A | interview [email protected]

Industry Q&A: Andrew Legge, Dragon Capital Christina Kautzky speaks with Andrew Legge, Director, Dragon Capital, about why Vietnam is off to a slow start this year, how LPs view the market, and where private equity opportunities lie. An article looking in-depth at Vietnam and the private equity firms in operation there will appear in next week’s AVCJ.

At the end of 2009, there seemed does it not just make more sense to Is there a prevailing personality old. The people here are highly to be a growing interest – and look south? of those who have invested in entrepreneurial, highly motivated wcertainly growing hype – about In fact, there has been [research Vietnam? and very excited about the private equity potential in put out on this recently] based We are generally seeing large, opportunities that lie ahead for Vietnam. However, it’s been fairly on wages. The view has been that accomplished LPs coming out of them and for the country. quiet so far this year. Why is there is wage inflation occurring either fund-of-funds, sovereign Still, one has to look through that? along the coastline of China, and wealth funds, or the direct those numbers to find the reality. My view is that Indonesia and therefore were you not better to institutional investment world. You need to weigh where the Vietnam seem to be the natural look at Vietnam? Particularly if the Interest from corporate pension money is going and what it means diversity markets for anyone feeling main issues were infrastructure, funds seems to be increasing as for the domestic economy. For heavy on China and India. In the then infrastructure in more remote well. Groups like endowments in instance, the number we track is fourth quarter of last year, there areas of China is no better. the US have committed to fund-of- dispersed FDI, and that is growing was not necessarily a strong feeling funds in Asia and thus their capital at a healthy rate such that it was toward which one; it was more, how And how do LPs view the market is allocated through [that channel]. above 10% of GDP for 2009. The do we play this? Resources being currently? Their mentality does vary, published number is same for 2010. what they are now, and the fact that We have been in the market though. Some [LPs] want a better both markets require a fair bit of fundraising for some time and trodden path before looking Then where are the opportunities effort, research and studying, means we’ve been happy to take our at Vietnam; some want to get for private equity investing in that one was chosen. time. We appreciate that we’re into Vietnam before the path is Vietnam? I don’t think it’s that anyone looking at a new space in private determined, because at that point it With Vietnam being the small made a conscious decision, but equity with Vietnam. We also gets expensive. market, one is required to take a clearly if those are the two natural appreciate that there needs to be a broad view when formulating an options for diversification, Indonesia lot of education in the traditional LP What are the most common investment mandate. One thing has stepped out in terms of community. We’ve been in Vietnam misconceptions still hindering LP we’ve done is focus on the domestic attracting capital as we’ve come for 16 years, so if it takes more time investment? economy [in two parts]. One is on into 2010. to do it right, then we’re okay with People don’t realize the disconnect private sector development, and that. between what you read and what’s the other is a renewed effort toward Looking at the draw of a market We’re starting to get passed really going on in the country. the privatization of state-owned like China, wouldn’t you argue the education mode, though there You have to land in the country enterprises. that with so much competition, are some that are still in that stage. before you realize how dynamic the We have deals on our desk that it would be worth investing Some LPs have made investments, economy is. we’d like to execute on right now. in a less crowded market like and some would like to take a One of the things Vietnam, where the valuations longer, harder look and are turning people say over and over are still reasonable? the corner for dedicating the time after visiting Vietnam is, I had a meeting recently with a to do the due diligence to make an “We had heard about the significant LP who is currently informed decision. Now, that list is entrepreneurialism and considering third and fourth tier relatively small, but those LPs are the fast-paced society, cities over Vietnam. The coastline also very savvy. but we had to see it to of China is where everyone already It would be great for us and for understand it.” is, but as the more popular areas Vietnam to see them move ahead; Private consumption of the country becomes too we would like to be investing and is two-thirds of GDP and competitive, and you have to go have deals on our desk to execute 60% of the population into the hinterland to find value, on. is under 30 years Modern Ho Chi Minh City

Number 8 | Volume 23 | March 2 2010 | avcj.com 15 Private Equity Data file | AVCJ research

private equity in asia Investment Breakdown by Country From January 1 to February 28 2010 Investee Country Amt. Invested US$mln No. of Deals (Disc.) No. of Investees India 689.97 17 17 17 China (PRC) 657.00 29 21 29 Indonesia 616.32 1 1 1 Australia 360.34 7 7 7 Hong Kong 142.37 4 4 4 Japan 81.06 8 7 8 Singapore 41.85 3 3 3 Malaysia 30.00 3 1 3 fund-raising monitor

Closed Fund New Funds Location: New Zealand Location: China (PRC) Fund Name: Direct Capital IV Fund Name: Everbright Jiangyin New Energy (Low Carbon) Closing Amount (m): NZ$325 (final close) Industry Investment Fund Launch Date: Nov-2008 Target Amount (m): RMB 3,000 Fund Manager/Advisor: Direct Capital Launch Date: Feb-2010 Stage Focus: Buy-outs (MBO/MBI/LBO), Expansion/Growth Capital, Mezzanine/Pre-IPO Fund Manager/Advisor: CEL Venture Capital Industry Focus: Agriculture/Fisheries, Computer related, Conglomerates, Construction, Con- Stage Focus: No Preference sumer products/services, Ecology, Electronics, Financial services, Information Industry Focus: Utilities – Renewable energy technology, Infrastructure, Leisure/Entertainment, Manufacturing –Heavy, Geographical Focus: China (PRC) Manufacturing-light, Media, Medical, Mining and metals, Public Administra- tion, Retail/Wholesale, Services - Non-financial, Telecommunications, Textiles Contact: Ling He and clothing, Transportation/Distribution, Travel/Hospitality, Utilities Phone: (86) 755-8302-6750 Geographical Focus: Australia, New Zealand Email: [email protected] Contact: Ross George Website: www.everbright165.com Phone: (64) 9-307-2562 Update: CEL Venture Capital, a wholly-owned firm of Email: [email protected] China Everbright, and four local enterprises from Jiangyin city in China’s Jiangsu province plan a Website: www.directcapital.co.nz RMB 3 billion RMB-denominated fund that will Update: Direct Capital Private Equity has successfully completed raising Direct Capi- focus on new energy projects and resources. The tal IV at NZ$325 million, including NZ$75 million in over-subscriptions above investment period for the fund will be four years its target of NZ$250 million. The fund is focusing on mid-market expansion and Everbright Jiangyin New Energy (Low Carbon) and management buyout investments in New Zealand and Australia. Industry Investment Fund has raised RMB 1 billion Existing investors in Direct Capital III re-committing to Direct Capital IV on in the first phase. average more than doubled their commitment levels and its cornerstone investor, the New Zealand Superannuation Fund increased its commitment by two and a half times. Direct Capital also attracted 16 new investors. Location: China (PRC) Fund Name: Carlyle-Fosun RMB Fund Location: China (PRC) Target Amount (m): NA Fund Name: CITIC Capital China Partners II Launch Date: Feb-2010 Closing Amount (m): US$925 (final close) Fund Manager/Advisor: Carlyle Asia Launch Date: July-2008 Stage Focus: No Preference Fund Manager/Advisor: CITIC Capital Partners Industry Focus: No Preference Stage Focus: Buy-outs (MBO/MBI/LBO), Privatization Geographical Focus: China (PRC) Industry Focus: Agriculture/Fisheries, Computer related, Conglomerates, Construction, Con- Contact: Wayne Tsou sumer products/services, Ecology, Electronics, Financial services, Information technology, Infrastructure, Leisure/Entertainment, Manufacturing –Heavy, Phone: (852) 2878-7000 Manufacturing-light, Media, Medical, Mining and metals, Services - Non-fi- Email: [email protected] nancial, Telecommunications, Textiles and clothing, Transportation/Distribu- Website: www.carlyle.com tion, Travel/Hospitality, Utilities Update: Carlyle established a strategic relationship with Geographical Focus: China (PRC) Fosun Group to launch a RMB-denominated fund Contact: Brian Doyle that will invest in high growth Chinese companies. Phone: (86) 21-6170-5512 With initial investment of $100 million from Car- lyle’s Asia Growth Fund and Fosun, the co-branded Email: [email protected] RMB fund will be able to immediately invest. Website: www.citiccapital.com Update: CITIC Capital has held a final close on US$925 million for its second private equity fund CITIC Capital China Partners II. The new fund will make buyout and privatization investments in well-established Chinese companies.

16 avcj.com | March 2 2010 | Volume 23 | Number 8