This morning I saw the headline, "Private equity firms plan cuts in China to escape property woes" (link below), and it just didn't seem quite right.
In our recent Private Equity Fund survey we found some results that paint a different picture. In fact, the PRC was the investment destination most commonly rated by respondents as providing the best opportunities into 2022. In fact, 85% of Hong Kong-based managers indicated it was the best place to invest.
It's certainly true that the PRC real property sector is facing challenges: our data indicated that real estate was favoured by only 4% of managers surveyed as compared to the tech and healthcare sectors. But investors continue to deploy funds in the PRC in these sectors and they garnered 5 times more interest than real property in our survey.
Certainly the assertion that PE in China remains robust is supported by recent data around M&A activity: Bain's Asia-Pacific Private Equity Report 2021 states that China M&A activity underwent a 42% year on year increase in value from 2019 to the end of 2020.
So regardless of the news that seems to focus on the Evergrande woes as a purported driver of wider distress, I am still optimistic that 2022 will be a good year for PE in China, and for the Asia region more generally. At least that corroborates with the captioned article in the statement that, "a third of the investors plan to increase their allocations to Asia Pacific outside of China. The biggest increases will be in buyout, infrastructure and venture capital."
Stay tuned for our full survey report, which will be out shortly. It will contain a lot more data and insights.
a third of the investors plan to increase their allocations to Asia Pacific outside of China. The biggest increases will be in buyout, infrastructure and venture capital, the report said