CHARTS TEXT X.D. Yang Managing Director Foreign Investment in China: The Private Equity Perspective Carlyle Shanghai Office
CHARTS TEXT Favorite Destination Fasting Growing & 2nd Largest Market in Asia Private Equity Investment in ChinaPrivate Equity Investment Ranking FDI into China
CHARTS TEXT Favorable Trends for Private Equity Investing Attractive macro-economic growth story Structural changes - WTO Privatization of SOEs Private sector growth Large technology based talent pool More reasonable valuation Exits become easier
CHARTS TEXT Trends: SOE Privatization Prompts Change in Ownership Gross industrial output value of SOE to total Percent Total number of State Owned Enterprises (SOE) in China = 340,000 Source: China Statistics Year Book SOEs to be kept – less than 200 SOEs to be privatized
CHARTS TEXT Trends: Growing Engineer Pool Fosters VC Talents Engineering Post Graduates (LHA) Engineering College Graduates (RHA) (thousands) Source: CEIC, Morgan Stanley Research
CHARTS TEXT Trends: Valuation Has Come Down Source: Bloomberg
CHARTS TEXT Still…Challenges Like No Other Markets Limited exit channel Lengthy deal execution process Difficult to gain control Volatile industry dynamics with irrational competitors in SOEs Lack of management talent pool Unpredictable regulatory and legal environment
CHARTS TEXT Carlyle’s Investments Three Roads to China BuyoutVenture Real Estate A chain of nine department stores in China. World’s largest supplier of artificial Christmas trees. $45 mm $35 mm $300+ mm* Leading online travel information and reservation services company in China. Leading Lithium-ion polymer batteries maker in China. Leading Chinese Media Company Investments range $10-50 mm Commercial and Residential $400+ mm* Leading Chinese Insurance Provider * Transactions in progress Leading Chinese Construction Equipment Manufacturer Leading Chinese Media company with focuses on delivering advertisements through traditional and non-traditional media.