An Acuris company Asia’s Private Equity News Source avcj.com September 05 2017 Volume 30 Number 33 EDITOR’S VIEWPOINT What regulation means for China outbound M&A Page 3 NEWS Accel, Blackstone, DSG, EDBI, GGV, Hillhouse, IDFC, IDG, J-Star, KKR, Matrix, Mercury, MSPEA, Norwest, Qingsong, Samara, SDIC, Sequoia, TPG, Yunfeng Page 4 DEAL OF THE WEEK Navis poultry play leads to China agri payout Page 12 Affinity backs Lock & Lock for regional growth push Page 13 INDUSTRY Q&A A founder’s friend? Barnaby Lyons of Bain Capital Credit Asian corporate culture means VCs are loath to replace founder-CEOs Page 7 Page 15 FOCUS DEAL OF THE WEEK Alignment of forces Pedals to the metal Shifting GP-LP relations under the microscope Page 10 GoGoVan and 58 Suyun fuel up for expansion Page 12 China M&A Forum 2017 19中国企业并购论坛 October 2017 l Four Seasons Hotel Pudong, Shanghai l 2017年10月19日 上海浦东四季酒店 GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY 全球视野 , 本土机遇 The China M&A Forum returns to Shanghai this October. Join US$ 270+ senior corporate investors, fund managers, M&A全球视野，本土机遇 advisers and book300 before and policy makers from across the globe to discuss the latest SAVE drivers, key opportunities, and most pressing challenges 8 September affecting M&A in and out of China. (THIS FRIDAY) Keynote Shuang Chen Executive Director and Chief Executive Officer CHINA EVERBRIGHT LIMITED Early confirmed speakers to attend include: Michael Weiss Honghui Sun Jay Cheng Senior Advisor Chief Investment Officer VP & Corporate SANPOWER GROUP CHINA-EURASIAN Development Officer, ECONOMIC APAC COOPERATION FUND JOHNSON CONTROL INC. Clarence Kwok Bagrin Angelov Brian Chi Executive Director, Executive Director Managing Director, Asia Pacific Mergers & CHINA INTERNATIONAL Private Equity Acquisitions CAPITAL CORPORATION BLACKSTONE MORGAN STANLEY LIMITED (CICC) 2016 Forum key statistics: 270+ Participants 100+ Corporates 37 Speakers 20 Countries Registration Enquiries: SponsorshipSponsorship Enquiries: Enquiries: Anil Nathani T: +852 2158 9636 DarrylDarryl Mag Mag T: T:+852 +852 3411 2158 4919 9639 E: [email protected] E:E: [email protected] [email protected] Enquiry Co-Sponsors Wi-Fi Sponsor Exhibitors Co-hosted by: Simultaneous translation is available www.chinamergers.net China M&A Forum EDITOR’S VIEWPOINT 2017 [email protected] 19中国企业并购论坛 October 2017 l Four Seasons Hotel Pudong, Shanghai Both same font l 2017年10月19日 上海浦东四季酒店 GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY 全球视野 , 本土机遇 years The China M&A Forum returns to Shanghai this October. Join US$ Within the rules 270+ senior corporate investors, fund managers, M&A全球视野，本土机遇 advisers and book300 before Managing Editor and policy makers from across the globe to discuss the latest SAVE Tim Burroughs (852) 2158 9661 Associate Editor drivers, key opportunities, and most pressing challenges 8 September A HYPOTHETICAL CHECKLIST FOR A be looked upon kindly if they offer exposure Winnie Liu (852) 2158 9663 affecting M&A in and out of China. (THIS FRIDAY) private equity firm working with a Chinese to foreign technology and manufacturing corporate on an outbound acquisition might expertise, help export Chinese production Staff Writer Holden Mann (852) 2158 9646 include some of the following: 1) Pick a partner capacity, contribute to the country’s resources Justin Niessner (852) 2158 9678 Keynote you know well; 2) Target an asset that is relevant and agricultural needs, or play a role in general to the partner’s core business; 3) Make sure that industry upgrades. Design partner has a presence and/or capital overseas Other investments are classified as restricted Edith Leung, Mansfield Hor Shuang Chen so the regulatory approvals process is easier; or prohibited. The former category includes Rana Tang Executive Director and Chief Executive Officer 4) If unable to fulfill the criteria in point three, sectors like real estate, hotels, cinemas, Events establish whether the partner has relationships entertainment, and sports – all of which have George Sengulovski, Jessie Chan, CHINA EVERBRIGHT LIMITED that can be leveraged; 5) Highlight a One Belt, received plentiful Chinese capital in recent years. Jonathon Cohen, Sarah Doyle, One Road (OBOR) angle in any submission that Furthermore, outbound investment funds will be Amelie Poon, Fiona Keung, needs to be made to Chinese regulators; 6) Have restricted if a specific industry project is not cited. Jovial Chung, Early confirmed speakers to attend include: a means of exit. It remains to be seen how widely the net will Marketing CITIC Private Equity has checked the first be cast in bringing supposedly “normal” sectors Agrina Sandri, Priscilla Chu, Michael Weiss Honghui Sun Jay Cheng three boxes with its acquisition of Canada-based under the restricted umbrella, how long the Research Senior Advisor Chief Investment Officer VP & Corporate Therapure Biopharma’s contract development approvals process will be, and what documentary Helen Lee, Herbert Yum, SANPOWER GROUP CHINA-EURASIAN Development Officer, and manufacturing (CDMO) business, which is evidence must be submitted. Kaho Mak, Tim Wong ECONOMIC APAC being executed in conjunction with 3SBio. The While deals involving New York hotels and COOPERATION FUND JOHNSON CONTROL INC. GP has been an investor in 3SBio since 2013. English Premier League football clubs are not off Sales The CDMO asset represents a logical addition to limits, strictly speaking, they will be subject to a Anil Nathani, Ashley Poon, Darryl Mag, Clarence Kwok Bagrin Angelov Brian Chi 3SBio’s business, which it is seeking to make more lot more scrutiny. On the other hand, a logistics Debbie Koo, Wendy Yu, Executive Director, Executive Director Managing Director, international. 3SBio is listed in Hong Kong so its transaction in Southeast Asia would likely Gavin Lam, Pauline Chen Asia Pacific Mergers & CHINA INTERNATIONAL Private Equity capital is not locked in the mainland. CITIC PE also encounter a smoother approvals process – which Acquisitions CAPITAL CORPORATION BLACKSTONE has a way out: the GP can sell its stake to 3SBio on is why some prospective buyers might try and Subscriptions MORGAN STANLEY LIMITED (CICC) pre-agreed terms after four years. play the OBOR card. Karina Ting, Sally Yip Points four and five are therefore less relevant For private equity firms partnering Chinese Publishing Director 2016 Forum key statistics: in this case, but they might be worth considering corporates on outbound deals, typically Allen Lee by other private equity firms backing outbound participating in a minority capacity and providing deals, particularly in the light of new guidance capital and expertise, selection will become a 270+ Participants 100+ Corporates 37 Speakers 20 Countries on overseas M&A released by Chinese regulators. lot more important. They must ask themselves Hong Kong Headquarter The guidance reinforces the existing government whether their partners have the domestic 16th Floor Registration Enquiries: SponsorshipSponsorship Enquiries: Enquiries: policy of cracking down on irrational transactions credibility, the ability to bring capital offshore, and Grand Millennium Plaza – where companies make lavish bets on the executional capabilities to get deals done. 181 Queen’s Road Central Hong Kong Anil Nathani T: +852 2158 9636 DarrylDarryl Mag Mag T: T:+852 +852 3411 2158 4919 9639 assets that have little in common with existing Plenty of transactions currently in the T. (852) 2158 9700 E: [email protected] E:E: [email protected] [email protected] Enquiry operations – as well as offering insights into pipeline may fall through, but at the same time F. (852) 2158 9701 which sectors might be favored. new opportunities will open up – working E. [email protected] URL. avcj.com Co-Sponsors Chinese corporates have committed with corporates on encouraged deals or going $82.5 billion to 226 outbound deals so far this solo elsewhere. A GP with an offshore fund is Beijing Representative Office year, compared to $204.1 billion across 282 not subject to the same restrictions as Chinese Room 77, Level 26, transactions for the whole of 2016, according to groups with renminbi-denominated assets, so it Fortune Financial Center No. 5, Dong San Huan Zhong Road Chaoyang District, Mergermarket. Capital controls remain in place may find there is less competition for deals than Beijing, 100020 China and banks have been warned about supporting before. And they still have scope to leverage T. (86) 10 5869 6203 deals launched by a handful of profligate relationships with Chinese corporates, potentially F. (86) 10 5869 6205 Wi-Fi Sponsor Exhibitors companies, but OBOR deal flow continues to positioning portfolio companies for future trade E. [email protected] increase even as broader M&A activity slows. sales, if and when the regulatory focus shifts. OBOR features prominently in the section The Publisher reserves all rights herein. Reproduction in whole or on “encouraged outbound investments” in the in part is permitted only with the written consent of AVCJ Group Limited. document published last month by the National ISSN 1817-1648 Copyright © 2017 Development & Reform Commission, Ministry of Tim Burroughs Co-hosted by: Commerce, People’s Bank of China, and Ministry Managing Editor of Foreign Affairs. Transactions will also likely Asian Venture Capital Journal Simultaneous translation is available www.chinamergers.net Number 33 | Volume 30 | September 05 2017 | avcj.com 3 NEWS KKR to take control of Alvin Liu, an angel investor and co-founder of AUSTRALASIA Tencent Holdings, has closed its third renminbi- Laser Clinics Australia denominated fund at RMB850 million ($129 Mercury gets go-ahead for KKR has acquired a majority stake in cosmetic million). LPs include Shenzhen Guidance Fund, treatments business Laser Clinics Australia (LCA) SDIC Chuanghe National Venture Capital Fund, healthcare deal at a valuation of A$650 million ($515 million). The Qianhai FoF, Zhenjiang State-Owned Investment Australia-based middle market GP Mercury deal facilitates a partial exit for The Growth Fund. Holding Group, Redbud Capital, and Jingbei Capital has won regulatory approval to acquire Following The Growth Fund’s investment Investment.