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Overview of China’s VC/PE Market 1
Review of China’s VC Market in 2012 2
Review of China’s PE Market in 2012 3
Review of China’s M&A Market in 2012 4
Contents
Review of Chinese IPOs in 2012 5
VC/PE Market Highlights in 2012 6
3
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
In 2007: Pilot of Direct Investment by Securities Companies; Implementation of New Partnership Enterprise Law; Measures for the Administration of Trust Companies; Preferential Tax Policies for VC Investment; Enterprises Catalogue of Industries for Guiding Foreign Investment;
In 2008: Approval on Independent Investment by Social Security Fund; Draft on GEM; New Rules on Shanghai & Shenzhen Stock Exchanges; Measures for the Administration of VC Guiding Funds; Guidelines on the Risk Management of M&A Loans of Commercial Banks;
In 2006: Document No.10 of MOFCOM; Re-launch of China’s IPO Application;
In 2005: Documents No.11, 29 & 75 of the State Administration of Foreign Exchange; Interim Measures for the Administration of VC Investment Enterprises;
In 2003: Measures for the Administration of Foreign-invested VC Investment Enterprises; Document No.3 of the State Administration of Foreign Exchange;
In 2004: SMEB Catalogue of Industries for Guiding Foreign Investment Administration Storm of Outbound/Inbound Investments
In & before 1999: “Proposal No.1” of CDNCA in 1998; Investment Fund Law (Draft); Industrial Investment Fund Law (Draft); VC Development Advices of MOST, etc.
In 2000: Nine Rules for GEM; Interim Provisions on Domestic Investment by Foreign-funded Enterprises;
In 2001: Interim Provisions on VC Investment by Foreign-funded Enterprises; Regulations of Zhongguancun Science Park; Dotcom bubble;
In 2002: Provisions on the Administration of Foreign-funded Telecommunications Enterprises; Catalogue of Industries for Guiding Foreign Investment;
In 2009: Properly Broaden Trust Investment Businesses; Measures for Overseas Investment Management; Launch of ChiNext; Lower Threshold of Direct Investment by Securities Companies; Document No.87 of State Administration of Taxation;
In 2010: Opinions on Encouraging & Guiding Sound Development of Private Investment Policy on Taxation of Equity Investment Funds; Provisions on the Registration of Foreign-funded Partnership Enterprises; Decision of the State Council on Accelerating the Fostering and Development of Strategic Emerging Industries; 12th Five-year Plans;
In 2011: QFLP Program in Beijing, Shanghai & Chongqing; Circular on Regulating the Record-filing Administration of Equity Investment Firms; Provisions on the Implementation of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors;
In 2012: Further Reforming the System of Issue of New Shares; Improving Delisting System; Finance Comprehensive Reform Experimental Zone in Wenzhou; China PE Secondary Market Development Alliance; 12th Five-year Plan on Financial Development & Reform.
VC/PE Policies Guide Market Development in 10+ Years, Diversified Exit Options Formed
4
Fund Management Firms Witness Continued Expansion in Quantity
Development Stage 1995 2000 2005
VC/PE 10
Active Firms
Legend Capital
100 Active Firms
SAIF CCB Intl
CDH
500 Active Firms
Sequoia Capital
2012
6290 Active Firms
Hony Capital
Guosen H&S
China- Belgium
Fund
CITIC PE IDG VC Fortune VC
SCGC
GSR Ventures
Jiuding Capital
IER VC
As of the end of 2012
5
Overview of China’s VC/PE Market 1
Review of China’s VC Market in 2012 2
Review of China’s PE Market in 2012 3
Review of China’s M&A Market in 2012 4
Contents
Review of Chinese IPOs in 2012 5
VC/PE Market Highlights in 2012 6
6
1,298 639 699
4,067 3,973 5,485
7,310 5,856
11,169
28,202
9,312
34 28 21 29 3958
11694
158
382
252
0
50
100
150
200
250
300
350
400
450
0
5,000
0,000
5,000
0,000
5,000
0,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Fundraising Amt. (US$ M) No. of New Funds
2012 Witness VC Fundraising Sharply Shrinking by 67.0% YoY
A total of 252 VC funds available to the investments in Chinese mainland were closed in 2012, down 34.0% year-on-year. Among them, 247 funds disclosed the newly raised capital of US$9.31B in total, down 67.0% year-on-year.
Although 2012 saw a sharp plunge in fundraising of VC funds, the number of new funds still surpassed that in 2010. However, the average size of the new funds in 2012 merely amounted to US$37.70M, the lowest level since 2005.
Comparison of Fundraising of VC Funds in 2002 Major Findings
7
369 219774 1,092
2,3413,567
6,867
20,405
6,938
330
3,8483,199
4,393
4,969
2,289
4,302
7,797
2,374
10 7
12 29
88 84
146
351
236
1122 27 29 28
10 1231
160
000
000
000
000
000
2004 2005 2006 2007 2008 2009 2010 2011 2012
Amt. Raised by RMB Funds (US$ M) Amt. Raised by USD Funds (US$ M)No. of RMB Funds No. of USD Funds
RMB Funds Dominate the Market But Register Smaller Average Size
Among the 252 new funds raised in 2012, RMB funds dominating the market numbered 236, with US$6.94B or RMB43.78B raised in total, accounting for 93.7% and 74.5% of the respective total.
RMB funds reported an average fundraising amount of US$29.91M or RMB189.00M in 2012, while foreign currency funds were 5.29 times of the former with US$158.00M average size.
Comparison of Fundraising of VC Funds in 2004-2012 Major Findings
8
518 418 992 1,269 1,173 1,7773,247
4,2102,701
5386.95
13,003.43
7,319.56
216 226177
253 228
324
440
607
477
817
1,505
1,071
0
200
400
600
800
1000
1200
1400
1600
0
2000
4000
6000
8000
10000
12000
14000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Investment Amt. (US$ M) No. of Investment Deals
China’s VC Investments Drop YoY, But Maintain Strong Momentum with over 1,000 Deals Completed
2012 completed a total of 1,071 investment deals in China’s VC market, down 28.8% year-on-year, with a combined investment amount of US$7.32B involved, dropping by 43.7% yearly.
Although VC investments dropped a bit from the investment fever in 2011, the number and amount of VC investments in 2012 showed a growing momentum compared with the previous years.
Comparison of VC Investments in 2001-2012 Major Findings
9
RMB Funds, 774 , 72%
Foreign Currency
Funds, 198 , 19%
Undisclosed, 99 , 9%
RMB Funds, 4,535.36 ,
62%
Foreign Currency Funds,
2,784.20 , 38%
2012 Sees RMB Funds Securing A Good Lead in No. of Investment Deals
Distribution of VC Investments by Currency in 2012 (By No. of Deals)
Distribution of VC Investments by Currency in 2012 (By Investment Amt., US$M)
10
72.97 238.35
24.31 31.97 42.71 52.66 78.52
128.65 157.99 161.21
219.05 227.13 229.53 248.31
297.50 305.08 341.26 343.59 366.64 380.67
521.61 544.49
726.45 1,578.91
0 400 800 1200 1600
UndisclosedOthers
ICLogistics
Broadcasting & Digital TVEducation & Training
Textile & ClothingReal Estate
Food & DrinksConstruction/Engineering
AutomobilesAgr/Forestry/Fishing
FinanceChain Retail
Entertainment & MediaElectronic & Opto-electronics…
Chemical Raw Materials & ProcessingClean-tech
Energy & MineralIT
Machinery ManufacturingTelecom & Value-added Services
Bio/HealthcareInternet
14 19
4 5 7 8 9 12 14
20 21 25
31 32 36 36
48 74
80 86
101 103
124 162
- 20 40 60 80 100 120 140 160 180
UndisclosedOthers
Real EstateBroadcasting & Digital TV
LogisticsEducation & Training
ICFinance
Texti le & ClothingFood & Drinks
Chain RetailEnergy & Mineral
AutomobilesConstruction/Engineering
Entertainment & MediaAgr/Forestry/Fishing
Chemical Raw Materials & ProcessingElectronic & Opto-electronics Equipment
ITClean-tech
Machinery ManufacturingTelecom & Value-added Serv ices
Bio/HealthcareInternet
Internet, Bio/Healthcare and Telecom & Value-added Services Sectors Take Top Three Slots in VC Investments
Industry Breakdown of VC Investments in 2012 (By No. of Deals)
Industry Breakdown of VC Investments in 2012 (By Investment Amt., US$M)
11
158.83
204.97
215.85
237.14
547.54
575.06
685.78
752.49
1,095.21
1,595.34
0 500 1000 1500 2000
Henan
Anhui
Shandong
Hubei
Shenzhen
Jiangsu
Guangdong (Excl. Shenzhen)
Shanghai
Zhejiang
Beijing
20
25
33
53
67
80
90
125
145
237
0 50 100 150 200 250
Hunan
Anhui
Shandong
Hubei
Guangdong (Excl.Shenzhen)
Zhejiang
Shenzhen
Jiangsu
Shanghai
Beijing
Beijing Takes the Lead in Both Number of Deals and Investment Amount
Geographical Distribution of VC Investments in 2012 (By No. of Deals)
Geographical Distribution of VC Investments in 2012 (By Investment Amt., US$M)
12
Size<5.00, 609, 57%
5.00≤Size<10.00, 171, 16%
10.00≤Size<20.00, 109,
10%
20.00≤Size<30.00, 30, 3%
30.00≤Size<50.00, 27, 3%
50.00≤Size, 13, 1%
Undisclosed, 112, 10%
Size<5.00, 1334.51315,
18%
5.00≤Size<10.00,
1193.734446, 16%
10.00≤Size<20.00,
1440.940969, 20%
20.00≤Size<30.00,
1116.005818, 15%
30.00≤Size<50.00,
587.8301926, 8%
50.00≤Size, 1646.536884
, 23%
VC Investments in 2012 Were Relatively Small-sized, over 80.0% Deals below US$10.00M
Comparison of VC Investments in 2012 by Investment Size (By No. of Deals)
Comparison of VC Investments in 2012 by Investment Size (By Investment Amt., US$M)
13
317
427
276
51
0
50
100
150
200
250
300
350
400
450
Early Stage Expasion Stage Late Stage Undisclosed
1,486.54
2,431.31
3,053.82
347.89
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
Early Stage ExpasionStage
Late Stage Undisclosed
Early-stage Investments Account for Nearly 30.0% in 2012
Comparison of VC Investments in 2012 by Investment Stage (By Investment Amt., US$M)
Comparison of VC Investments in 2012 by Investment Stage (By No. of Deals)
14
64
11222
55667
161818
20222223
2931
0 5 10 15 20 25 30 35
UndisclosedOthers
Real EstateEducation & Training
ICChain Retail
Entertainment & MediaTextile & ClothingEnergy & Mineral
Agr/Forestry/FishingFood & Drinks
AutomobilesTelecom & Value-added Services
Construction/EngineeringClean-tech
Bio/HealthcareInternet
Chemical Raw Materials & ProcessingIT
Machinery ManufacturingElectronic & Opto-electronics…
IPO, 144, 59%
Trade Sale, 44, 18%
M&A, 31, 13%
MBO, 18, 7%
Repurchase, 3, 1%
Liquidation, 1, 1% Others, 2, 1%
Note: An exit deal refers to a VC fund exiting from an invested company. N deals occur when N VC funds exit from one investee.
M&As and Trade Sale Exits Are Likely to Account for Bigger Share Due to Difficulties in IPO
Industry Breakdown of VC Exits in 2012 Exit Option of VC Exits in 2012: 246 Exits
15
Overview of China’s VC/PE Market 1
Review of China’s VC Market in 2012 2
Review of China’s PE Market in 2012 3
Review of China’s M&A Market in 2012 4
Contents
Review of Chinese IPOs in 2012 5
VC/PE Market Highlights in 2012 6
16
14,196
35,584
61,153
12,958
27,621
38,858
25,313
40
6451
30
82
235
369
0
50
100
150
200
250
300
350
400
0.00
0,000.00
0,000.00
0,000.00
0,000.00
0,000.00
0,000.00
0,000.00
2006 2007 2008 2009 2010 2011 2012
Fundraising Amt. (US$ M) No. of New Funds
PE Funds Sharply Number up, But the Average Fundraising Amount Down Nearly 60.0%
2012 saw 369 new PE funds investable in Chinese mainland closed, down nearly 57.0% year-over-year. Among them, 359 funds disclosed a combined fundraising amount of US$25.31B, down 34.9% from a year earlier.
Although the fundraising amount dropped in 2012 compared with the previous year, the number of new funds surged up to 369. Moreover, the average fundraising amount nosedived by 58.4%, hitting a new low in recent years.
Major Findings Comparison of Fundraising of PE Funds in 2006-2012
17
9473,305
21,328
8,72810,678
23,408
18,135
13,250
32,183
39,825
4,230
16,94315,450
7,178
3 1020 21
71
209
354
37 50 319
1126
150
50
100
150
200
250
300
350
400
0
000
000
000
000
000
000
000
000
000
2006 2007 2008 2009 2010 2011 2012
Amt. Raised by RMB Funds (US$ M) Amt. Raised by USD Funds (US$ M)
No. of RMB Funds No. of USD Funds
Major Findings
RMB Funds Outnumbers Foreign Currency Peers Dominantly, But Have Much Smaller Average Size
2012 witnessed that 354 RMB PE funds and 15 foreign currency ones were raised. Although RMB funds far outnumbered their foreign currency peers, they still lagged behind the latter in terms of the average fundraising size.
Comparison of Fundraising of PE Funds in 2006-2012
18
Growth Fund, 261, 71%
Real Estate Fund, 94, 25%
Mezzanine Fund, 7, 2%
Buyout Fund, 6, 2%
Distressed Debt Fund, 1,
0%
Growth Fund, 18371.62,
73%
Real Estate Fund,
5954.76, 24%
Mezzanine Fund, 129.2,
0%
Buyout Fund, 849.13, 3% Distressed
Debt Fund, 7.95, 0%
PE Real Estate Funds Stand out with 94 New Funds Closed
Distribution of PE Fundraising in 2012 by Fund Type (By Fundraising Amt., US$M)
Distribution of PE Fundraising in 2012 by Fund Type (By No. of Funds)
19
12,973 12,817
9,606
8,65210,381
27,597
19,785
129177
155117
363
695 680
0
100
200
300
400
500
600
700
800
0
000
000
000
000
000
000
2006 2007 2008 2009 2010 2011 2012
Investment Amt. (US$ M) No. of Investment Deals
PE Investments Continue to Rise, Maintain High Level in No. of Deals
关键发现
In 2012, the number and amount of PE investments in China’s market were basically on a par with that of the pervious year. A total of 680 investment deals were closed in 2012, among which 606 deals disclosed a combined investment amount of US$19.79B, down 28.3% year-on-year.
Comparison of PE Investments in 2006-2012 Major Findings
20
RMB Fund, 568, 84%
Foreign Currency Fund,
103, 15%
Undisclosed, 9, 1%
RMB Fund, 11,854.08 , 60%
Foreign Currency Fund, 7,930.44 ,
40%
Foreign Currency Funds Account for 40.0% of the Total Investment Amount
Comparison of PE Investments in 2012 by Currency (By No. of Deals)
Comparison of PE Investments in 2012 by Currency (By Investment Amt., US$M)
21
139.84 659.84
27.78 57.22 65.00 161.39 237.34 271.01 277.50 376.49 379.65 400.37 436.27 472.37 518.35 534.36
674.01 772.80 876.01
1,172.41 2,168.48 2,264.13
3,208.72 3,633.18
0 1,000 2,000 3,000 4,000
UndisclosedOthers
Broadcasting & Digital TVLogistics
Education & TrainingITIC
Construction/EngineeringEntertainment & Media
Food & DrinksTextile & Clothing
Electronic & Opto-electronics…Automobiles
Agr/Forestry/FishingTelecom & Value-added Services
Machinery ManufacturingClean-tech
Chain RetailChemical Raw Materials &…
Bio/HealthcareFinance
Energy & MineralReal Estate
Internet
620
1345
111515
1823
26272930
3536
414345
4954
6480
0 20 40 60 80 100
UndisclosedOthers
ICBroadcasting & Digital TV
Education & TrainingLogistics
Textile & ClothingAutomobiles
Food & DrinksFinance
Construction/EngineeringEntertainment & Media
Chain RetailIT
Telecom & Value-added ServicesChemical Raw Materials & Processing
Electronic & Opto-electronics…Energy & Mineral
Agr/Forestry/FishingClean-tech
InternetMachinery Manufacturing
Bio/HealthcareReal Estate
PE Investments in Real Estate on the Rise; Internet Ranks First in Investment Amount
Industry Breakdown of PE Investments in 2012 (By No. of Deals)
Industry Breakdown of PE Investments in 2012 (By Investment Amt., US$M)
22
21
24
27
27
40
42
45
47
87
123
0 50 100 150
Henan
Hubei
Shandong
Sichuan
Zhejiang
Jiangsu
Guangdong (Excl. Shenzhen)
Shenzhen
Shanghai
Beijing
426.43
431.54
602.38
622.16
711.76
885.19
1,050.50
2,562.57
3,347.40
3,970.47
0.00 2,000.00 4,000.00 6,000.00
Tianjin
Henan
Shandong
Sichuan
Hubei
Jiangsu
Guangdong (Excl. Shenzhen)
Shanghai
Beijing
Zhejiang
Beijing Ranks First in No. of Deals; Zhejiang Leads in Investment Amt.
Geographical Distribution of PE Investments in 2012 (By No. of Deals)
Geographical Distribution of PE Investments in 2012 (By Investment Amt., US$M)
23
Growth Capital,
518 , 76%
Real Estate, 78 ,
12%
PIPE, 69 , 10%
Bridge Capital, 7 ,
1%
Buyout, 6, 1%
Mezzanine Capital, 2,
0%
Growth Capital,
11,073 , 56%
Real Estate, 3,106 , 16%
PIPE, 4,837 , 24%
Bridge Capital, 118 , 1%
Buyout, 582.03 , 3% Mezzanine
Capital, 69.91 , 0%
Investment Size Tends to Become Smaller; Real Estate Investments and PIPE Are in the Limelight
Comparison of PE Investments in 2012 by Investment Strategy (By No. of Deals)
Comparison of PE Investments in 2012 by Investment Strategy (By Investment Amt., US$M)
24
4
1
2
2
4
5
5
6
7
9
10
10
12
12
12
12
18
18
28
0 5 10 15 20 25 30
Others
Agr/Forestry/Fishing
Telecom & Value-added Services
Logistics
Internet
Chemical Raw Materials &…
Finance
Textile & Clothing
Construction/Engineering
Bio/Healthcare
Food & Drinks
Chain Retail
Real Estate
IT
Automobiles
Energy & Mineral
Electronic & Opto-electronics…
Clean-tech
Machinery Manufacturing
IPO, 124, 70%
Trade Sale, 30, 17%
M&A, 9, 5%
MBO, 8, 5%
Repurchase, 6, 3%
Note: one exit deal means that a PE fund exits from its investee, i.e. N PE funds exiting from an enterprise shall be regarded as N exit deals.
PE Exits Pick up, IPO Exits Drop to 70.0% in Share
Industry Breakdown of PE Exits in 2012 (177 Exits) Exit Option of PE Exits in 2012 (177 Exits)
25
Overview of China’s VC/PE Market 1
Review of China’s VC Market in 2012 2
Review of China’s PE Market in 2012 3
Review of China’s M&A Market in 2012 4
Contents
Review of Chinese IPOs in 2012 5
VC/PE Market Highlights in 2012 6
26
15,255
27,023
34,53933,147
34,803
66,918
50,762
171 201
181294
622
1157
991
0
200
400
600
800
1000
1200
1400
0
10000
20000
30000
40000
50000
60000
70000
80000
2006 2007 2008 2009 2010 2011 2012
M&A Value (US$M) No. of M&A Deals
Domestic M&A, 837,
84%
Cross-border
M&A, 154, 16%
Both Number and Transaction Value of M&As Decline Slightly YoY in 2012
Comparison of Chinese Enterprises’ M&As in 2006-2012 (By No. of M&As and M&A Value)
Comparison of M&As in 2012 by Type (By No. of M&As)
27
101 117 109
223
521
981
837
70 8433 38
101176 154
0
200
400
600
800
1000
1200
2006 2007 2008 2009 2010 2011 2012
No. of Doemstic M&As No. of Cross-border M&As
6,1678,354
23,642
14,455
19,389
31,959
17,279
9,088
18,669
8,685
16,099 15,414
34,95933,483
0
5000
10000
15000
20000
25000
30000
35000
40000
2006 2007 2008 2009 2010 2011 2012
Domestic M&A Value (US$M) Cross-border M&A Value (US$M)
Domestic M&As Remain Brisk; Cross-border M&As Outshine with Higher Transaction Value
Comparison of Chinese Enterprises’ M&As in 2006-2012 by Type (By No. of M&As)
Comparison of Chinese Enterprises’ M&As in 2006-2012 by Type (By M&A Value, US$M)
28
Industry No. of Deals (Total) % of Total No. of Deals
(Disclosed) M&A Value
(US$M) % of Total Average M&A Value (US$M)
Energy & Mineral 112 11.3% 105 22,225.04 43.8% 211.67
Machinery Manufacturing 112 11.3% 101 5,008.00 9.9% 49.58
Real Estate 100 10.1% 96 3,903.65 7.7% 40.66
Construction/Engineering 69 7.0% 60 3,080.05 6.1% 51.33
Bio/Healthcare 67 6.8% 58 1,695.54 3.3% 29.23
Chemical Raw Materials & Processing 60 6.1% 56 1,135.18 2.2% 20.27
Clean-tech 46 4.6% 42 428.26 0.8% 10.20
IT 46 4.6% 43 501.62 1.0% 11.67
Electronic & Opto-electronics Equipment 42 4.2% 42 664.55 1.3% 15.82
Finance 41 4.1% 33 2,071.36 4.1% 62.77
Automobiles 38 3.8% 29 973.10 1.9% 33.56
Chain Retail 36 3.6% 33 1,457.70 2.9% 44.17
Telecom & Value-added Services 34 3.4% 31 462.85 0.9% 14.93
Internet 32 3.2% 19 269.22 0.5% 14.17
Agr/Forestry/Fishing 22 2.2% 22 359.91 0.7% 16.36
Food & Drinks 21 2.1% 20 1,571.88 3.1% 78.59
Entertainment & Media 20 2.0% 15 2,871.38 5.7% 191.43
Logistics 12 1.2% 12 198.40 0.4% 16.53
Textile & Clothing 8 0.8% 8 139.54 0.3% 17.44
Broadcasting & Digital TV 3 0.3% 3 15.87 0.0% 5.29
Education & Training 3 0.3% 2 18.00 0.0% 9.00
IC 1 0.1% 1 7.96 0.0% 7.96
Others 66 6.7% 52 1,703.28 3.4% 32.76
Total 991 100.0% 883 50,762.34 100.0% 57.49
Energy & Mineral, Machinery Manufacturing Sectors Maintain Lead in No. of M&As
Industry Breakdown of Chinese M&A Deals in 2012 (By Target)
29
3630
2442
91
194208
0
50
00
50
00
50
2006 2007 2008 2009 2010 2011 2012
1,446673
1,015
5,779
6,364
11,968
5,141
0
2000
4000
6000
8000
10000
12000
14000
2006 2007 2008 2009 2010 2011 2012
VC/PE-backed M&As Pick up in Both the Number and Transaction Value
Comparison of VC/PE-backed M&As in 2006-2012 (By No. of M&As)
Comparison of VC/PE-backed M&As in 2006-2012 (By M&A Value, US$M)
30
Industry No. of Deals (Total) % of Total No. of Deals
(Disclosed) M&A Value
(US$M) % of Total Average M&A Value (US$M)
Machinery Manufacturing 21 10.1% 20 1,525.16 29.7% 76.26
Clean-tech 18 8.7% 17 208.46 4.1% 12.26
Electronic & Opto-electronics Equipment 18 8.7% 18 373.67 7.3% 20.76
IT 16 7.7% 16 162.06 3.2% 10.13
Energy & Mineral 15 7.2% 14 286.19 5.6% 20.44
Construction/Engineering 15 7.2% 14 284.29 5.5% 20.31
Telecom & Value-added Services 14 6.7% 14 81.75 1.6% 5.84
Chemical Raw Materials & Processing 13 6.3% 12 124.38 2.4% 10.37
Bio/Healthcare 12 5.8% 11 278.05 5.4% 25.28
Automobiles 10 4.8% 9 410.69 8.0% 45.63
Internet 10 4.8% 4 98.84 1.9% 24.71
Others 10 4.8% 8 717.46 14.0% 89.68
Agr/Forestry/Fishing 7 3.4% 7 64.03 1.2% 9.15
Food & Drinks 7 3.4% 7 232.25 4.5% 33.18
Chain Retail 6 2.9% 5 60.39 1.2% 12.08
Entertainment & Media 5 2.4% 4 135.17 2.6% 33.79
Finance 4 1.9% 3 26.79 0.5% 8.93
Logistics 3 1.4% 3 46.74 0.9% 15.58
Broadcasting & Digital TV 2 1.0% 2 10.35 0.2% 5.18
Real Estate 1 0.5% 1 11.24 0.2% 11.24
Textile & Clothing 1 0.5% 1 2.87 0.1% 2.87
Total 208 100.0% 190 5,140.81 100.0% 27.06
Industry Breakdown of VC/PE-backed M&As Scattered; Machinery Manufacturing Sector Leads in No. of M&As
Industry Breakdown of VC/PE-backed M&As in 2012 (By Target)
31
Overview of China’s VC/PE Market 1
Review of China’s VC Market in 2012 2
Review of China’s PE Market in 2012 3
Review of China’s M&A Market in 2012 4
Contents
Review of Chinese IPOs in 2012 5
VC/PE Market Highlights in 2012 6
32
61111
104834
21830
54652
105354
61532
26,326.63 151
242
113 176
476
356
201
0
50
100
150
200
250
300
350
400
450
500
0
00
00
00
00
00
00
2006 2007 2008 2009 2010 2011 2012
Financing Amt. (US$M) No. of IPOs
Domestic IPOs, 154,
77%
Overseas IPOs, 47,
23%
2012 Registers 425 IPOs Globally; Chinese IPOs Account for 47.3%
Comparison of Chinese Enterprises’ IPOs in 2006-2012 (By No. of IPOs and Financing Amt.)
Comparison of Chinese Enterprises’ Domestic and Overseas IPOs in 2012 (By No. of IPOs)
33
86118
37
77
129
7547
65
124
76
99
347
281
154
0
50
100
150
200
250
300
350
400
450
500
2006 2007 2008 2009 2010 2011 2012
No. of Overseas IPOs No. of Domestic IPOs
43,998
39,744
6,922
27,140
33,259
17,813
9,842
17,114
65,089
14,907
27,510
72,059
43,719
16,484
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2006 2007 2008 2009 2010 2011 2012
Financing Amt. of Overseas IPOs (US$M)
Financing Amt. of Domestic IPOs (US$M)
Both Number and Financing Amt. of Chinese IPOs Drop Continuously and Remarkably
Comparison of Chinese Enterprises’ Domestic and Overseas IPOs in 2006-2012 (By No. of IPOs)
Comparison of Chinese Enterprises’ Domestic and Overseas IPOs in 2006-2012 (By Financing Amt.,
US$M)
34
HKMB, 38, 81%
FWB, 6, 13%
NASDAQ, 1, 2%
NYSE, 1, 2%HKGEM, 1,
2%
HKMB, 9,557.84 ,
97%
FWB, 105.29 , 1%
NASDAQ, 81.90 , 1%
NYSE, 71.53 , 1%
HKGEM, 25.77 , 0%
Chinese Overseas IPOs Concentrate in Exchange; HKMB Serves as Primary Venue
Distribution of Chinese Enterprises’ Overseas IPOs in 2012 by Exchange
(By No. of IPOs)
Distribution of Chinese Enterprises’ Overseas IPOs in 2012 by Exchange (By
Financing Amt., US$M)
35
Industry Financing Amt. (US$M) % of Total No. of IPOs % of Total Average Financing
Amt. (US$M) Finance 4,821.63 49.0% 3 6.4% 1,607.21
Energy & Mineral 1,686.09 17.1% 9 19.1% 187.34
Construction/Engineering 804.91 8.2% 6 12.8% 134.15
Bio/Healthcare 540.04 5.5% 2 4.3% 270.02
Real Estate 498.07 5.1% 3 6.4% 166.02
Machinery Manufacturing 418.40 4.3% 4 8.5% 104.60
Clean-tech 318.94 3.2% 1 2.1% 318.94
Automobiles 275.97 2.8% 3 6.4% 91.99
Internet 153.43 1.6% 2 4.3% 76.72
Textile & Clothing 121.27 1.2% 5 10.6% 24.25
Food & Drinks 73.06 0.7% 3 6.4% 24.35
Chain Retail 66.05 0.7% 1 2.1% 66.05
IT 29.13 0.3% 2 4.3% 14.56
Telecom & Value-added Services 12.76 0.1% 1 2.1% 12.76
Chemical Raw Materials & Processing 7.09 0.1% 1 2.1% 7.09
Others 15.48 0.2% 1 2.1% 15.48
Total 9,842.33 100.0% 47 100.0% 209.41
Chinese Enterprises’ Overseas IPOs Are Sparsely Scattered across A Number of Industries in 2012
36
ChiNext, 74, 48%
SMEB, 55, 36%
SSE, 25, 16%
ChiNExt, 5,854.38 , 36%
SMEB, 5,673.26 , 34%
SSE, 4,956.67 , 30%
Nearly 50% of Chinese Domestic IPOs Take Place in ChiNext in 2012
Comparison of Chinese Enterprises’ Domestic IPOs in 2012 by Exchange (By No.
of IPOs)
Comparison of Chinese Enterprises’ Domestic IPOs in 2012 by Exchange (By
Financing Amt., US$M)
37
Industry Financing Amt. (US$M) % of Total No. of IPOs % of Total Average Financing
Amt. (US$M) Machinery Manufacturing 3,637.45 22.1% 34 22.1% 106.98
Construction/Engineering 1,580.97 9.6% 9 5.8% 175.66
Electronic & Opto-electronics Equipment 1,485.41 9.0% 17 11.0% 87.38
Clean-tech 1,339.02 8.1% 9 5.8% 148.78
Textile & Clothing 1,079.72 6.5% 7 4.5% 154.25
IT 986.27 6.0% 12 7.8% 82.19
Bio/Healthcare 982.15 6.0% 11 7.1% 89.29
Chemical Raw Materials & Processing 794.37 4.8% 8 5.2% 99.30
Automobiles 749.60 4.5% 6 3.9% 124.93
Energy & Mineral 563.97 3.4% 6 3.9% 93.99
Telecom & Value-added Services 508.69 3.1% 9 5.8% 56.52
Food & Drinks 490.04 3.0% 4 2.6% 122.51
Internet 290.85 1.8% 2 1.3% 145.43
Finance 275.32 1.7% 1 0.6% 275.32
Chain Retail 258.54 1.6% 2 1.3% 129.27
Logistics 217.09 1.3% 3 1.9% 72.36
Agr/Forestry/Fishing 196.06 1.2% 3 1.9% 65.35
Entertainment & Media 125.27 0.8% 2 1.3% 62.63
Broadcasting & Digital TV 61.03 0.4% 1 0.6% 61.03
Others 862.49 5.2% 8 5.2% 107.81
Total 16,484.30 100.0% 154 100.0% 107.04
Machinery Manufacturing Ranks Atop with 34 Domestic IPOs in 2012
38
31,524
34,053
3,419
15,625
39,512
29,542
11,088
39
94
35
77
221
171
106
0
50
100
150
200
250
0
5000
0000
5000
0000
5000
0000
5000
0000
5000
2006 2007 2008 2009 2010 2011 2012
Financing Amt. (US$M) No. of IPOs
Domestic IPOs, 92, 87%
Overseas IPOs, 14, 13%
IPOs of VC/PE-backed Chinese Enterprises Slow down; Domestic Exchanges Become Primary Choices
Comparison of No. and Financing Amt. of VC/PE-backed Chinese IPOs in 2006-2012
Comparison of No. of Domestic and Overseas IPOs of VC/PE-backed Chinese Enterprises in 2012
39
29
61
12
30
72
2914
10
33
23
47
149
142
92
0
0
0
0
0
0
2006 2007 2008 2009 2010 2011 2012
No. of Overseas IPOs No. of Domestic IPOs
31,225
14,954
2,078
10,813
12,860
6,142
930299
19,100
1,341
4,811
26,652
23,400
10,158
0
5000
10000
15000
20000
25000
30000
35000
2006 2007 2008 2009 2010 2011 2012
Financing Amt. of Overseas IPOs (US$M)Financing Amt. of Domestic IPOs (US$M)
2012 See VC/PE-backed Chinese IPOs Continuously Dropping; Overseas IPOs Are in the Mire
Comparison of No. of Domestic and Overseas IPOs of VC/PE-backed Chinese Enterprises in
2006-2012
Comparison of Financing Amt. of Domestic and Overseas IPOs of VC/PE-backed Chinese
Enterprises in 2006-2012
40
6.75
2.88 2.55
6.17 5.71
2.40
8.92
5.50
9.10
10.67
16.59
5.40
0.00
5.00
10.00
15.00
20.00
25.00
2007 2008 2009 2010 2011 2012
ROI of VC/PE-backed Chinese Domestic IPOSROI of VC/PE-backed Chinese Overseas IPOS
Exchange Avg. ROI (X)
Domestic Exchange
Shanghai Stock Exchange 2.54
ChiNext 6.09
SMEB 5.56
Average 5.40
Overseas Exchange
HKMB 1.13
NYSE 1.97
NASDAQ 7.78
HKGEM 1.71
Average 2.40
Average 5.13
Average Book-value ROI of VC/PE-backed Chinese IPOs Nosedives
Comparison of ROI of Domestic and Overseas IPOs of VC/PE-backed Chinese
Enterprises in 2007-2012
Comparison of ROI of Domestic and Overseas IPOs of VC/PE-backed Chinese
Enterprises in 2012
41
226177
253 228453
617762
594
1180
2200
1751
21 19 39
94 35 77 221 171 106
0
500
1000
1500
2000
2500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
No. of VC/PE Investment Deals No. of VC/PE-backed IPOs
VC/PE Investments vs. VC/PE-backed IPOs
42
Overview of China’s VC/PE Market 1
Review of China’s VC Market in 2012 2
Review of China’s PE Market in 2012 3
Review of China’s M&A Market in 2012 4
Contents
Review of Chinese IPOs in 2012 5
VC/PE Market Highlights in 2012 6
43
LP Highlights: --China’s LP Market Keeps Expanding; Institutional LPs Enter the Market
Comparison of LPs in China’s VC/PE Market by Type (As of 2012) (By No. of LPs)
Comparison of LPs in China’s VC/PE Market by Type (As of 2012) (By Investable Amt., US$B)
Domestic LP, 6,323 , 84.2%
Sino-foreign JV, 54 , 0.7% Foreign LP,
1,134 , 15.1%Domestic LP,
165.37 , 20.5% Sino-foreign JV, 4.04 , 0.5%
Foreign LP, 637.92 , 79.0%
Note: Investable amount of foreign LPs refers to the capital available for investing in VC/PE markets of Chinese mainland.
As of the end of 2012, Zero2IPO Database had included the information concerning 7,511 LPs who disclosed a total investable amount of US$807.34B.
44
LP Type No. of LPs (Total) % of Total No. of LPs
(Disclosed)
Investable Amt. in China VC/PE
(US$M) % of Total
Avg. Investable Amt. in China VC/PE (US$M)
Wealthy Families & Individuals
3773 50.2% 3597 8,673.14 1.1% 2.41
Enterprises 1289 17.2% 779 27,276.87 3.4% 35.02
VC/PE Firms 475 6.3% 327 25,588.44 3.2% 78.25
Investment Companies 441 5.9% 361 32,403.48 4.0% 89.76
Listed Companies 321 4.3% 296 212,375.91 26.3% 717.49
Government Agencies 242 3.2% 149 7,220.97 0.9% 48.46
Guidance Funds 207 2.8% 188 16,805.05 2.1% 89.39
Asset Managers 171 2.3% 82 18,434.57 2.3% 224.81
FOF 110 1.5% 87 51,515.54 6.4% 592.13
Banks 99 1.3% 43 23,885.95 3.0% 555.49
Public Pension Funds 96 1.3% 38 166,764.47 20.7% 4,388.54
Others 76 1.0% 54 1,605.12 0.2% 29.72
Insurance Companies 48 0.6% 26 1,606.54 0.2% 61.79
Trusts 45 0.6% 19 8,229.94 1.0% 433.15
Universities & Foundations
38 0.5% 32 5,952.83 0.7% 186.03
Family Offices 26 0.3% 16 11,017.00 1.4% 688.56
Endowments 24 0.3% 22 962.77 0.1% 43.76
Sovereign Wealth Funds
22 0.3% 10 154,306.61 19.1% 15,430.66
Corporate Pension Funds
8 0.1% 8 32,710.55 4.1% 4,088.82
Total 7,511 100.0% 6,134 807,335.73 100.0% 131.62
LP Highlights: --China’s LP Market Keeps Expanding; Institutional LPs Enter the Market
45
779 759
4,5026,255
3,064
4,7675,872
3,842
11,348 11,76212,643
8,060
5,677
8,313
6,1434,941
883
2,605
200
2,8311,932
17,843
1,241230
6,8887,529
6,796
2,0343,347
1,129
2,641 2,43417 19
36 33 45
6563
44
119
166
173
102
163 162 158
107
3 7 18
511
5 212
17 1810 9 6 10 6
0
20
40
60
80
100
120
140
160
180
200
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12
Amt. Raised by RMB Funds (US$ M) Amt. Raised by USD Funds (US$ M) No. of RMB Funds No. of USD Funds
In 2012, the fundraising on China’s VC/PE market faced severe pressure. Impacted by frequently promulgated policies by the China Securities Regulatory Commission, nosedive of IPOs, low stock prices, VC/PE suffered from narrower exit channel and declining ROI. In this connection, return rate further came back to rational level and the era of windfall profits ended.
VC/PE Fundraising Highlights: --VC/PE Funds’ Fundraising Faces Severe Pressure; Average Fundraising Amount Drops Significantly
46
3,795 4,173 3,572
2,276
920
6,020
2,108 2,305 2,952
4,705 4,403 3,708
8,133
13,870
9,034 9,564
6,198 6,335
10,357
4,214 194229
169170
87
135
179193
240 306313
321
517
588604
491454
487 496
314
0
100
200
300
400
500
600
700
0
2000
4000
6000
8000
0000
2000
4000
6000
Q1'08Q2'08Q3'08Q4'08Q1'09Q2'09Q3'09Q4'09Q1'10Q2'10Q3'10Q4'10Q1'11Q2'11Q3'11Q4'11Q1'12Q2'12Q3'12Q4'12
Investment Amt. (US$M) No. of Investment Deals
Quarter-on-quarter Comparison of VC/PE Investments in Q1’08-Q4’12
VC/PE Investment Highlights: --VC/PE Investments Decline Slightly
After the investment fever in 2011, the number and amount of VC/PE investments in 2012 gradually edged down due to unclear macro economic situation, unsmooth exit channel and internal adjustment in VC/PE industry, still surpassing the average level in 2010.
In the context of sluggish VC market, it is expected that the investments on the whole will remain in the mire in the days ahead. However, along with the promulgation of policies on encouraging private investments in H1’12, the room for VC/PE investments expanded further, posing a conducive effect to the pickup of investments in the future.
Major Findings
47
Comparison of ROI and No. of VC/PE-backed IPOs (2010’Q1-2012’Q4)
810
13
41
610
4
9
25 4 3
3134 34
50
42
3739
24
31 3027
42.85X 4.22X
9.28X 5.92X
9.95X
5.13X 4.61X 2.78X 1.83X 1.00 1.10
4.60
10.66X
18.47X
7.84X 7.51X
33.01X
8.92X 5.48X
11.50X
4.48X 6.40 4.99 5.04
0
10
20
30
40
50
60
2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4
No. of VC/PE-backed Overseas IPOs No. of VC/PE-backed Domestic IPOsAverage Book ROI on Overseas Markets Average Book ROI on Domestic Markets
Note: Sinovel has been excluded from VC/PE-baked Chinese domestic IPOs in 2011; otherwise, domestic markets would rendered an average book ROI of 16.59 times.
VC/PE Exit Highlights: --VC/PE ROI via IPO Exits Dives
48
7 50
510
74
1215
1822
43
-5
5
15
25
35
45
12Times
11Times
10Times
9Times
8Times
7Times
6Times
5Times
4Times
3Times
Twice Once
Fig. 1 Top VC Firms in Zero2IPO Ranking 2001-2012
No. of VC Firms in Ranking
5 4 25 6 8 9 10
14
15 16 1815 14 12 11 10
6
0
5
10
15
20
2004 2005 2006 2007 2008 2009 2010 2011 2012
Fig.2 Domestic vs. Foreign Firms in Top 20 VC Ranking in 2004-2012
No. of Domestic VC Firms No. of Foreign VC Firms
2001
2003
2005
2006
2002
2008
2009
2010
2011
2004
2007
2012
Zero2IPO Ranking 2012 Highlights: --Seven Top VC Firms Maintain Leadership in 12 Years of Zero2IPO Rankings
VC Firms of the Year in 2001-2012
49
94
9 712
45
05
101520253035404550
6 Times 5 Times 4 Times 3 Times Twice Once
Fig. 1 Top PE Firms in Zero2IPO Ranking 2007-2012
No. of PE Firms in Ranking
12
5 57 7
98
5 53 3
0
5
10
2007 2008 2009 2010 2011 2012
Fig.2 Domestic vs. Foreign Firms in Top 20 PE Ranking in 2007-2012
No. of Domestic VC Firms No. of Foreign VC Firms
2007
2009
2008
2010
2011
2012
PE Firm of the Year in 2007-2012
Zero2IPO Ranking 2012 Highlights: --Nine PE Firms Listed in Z-Ranking for 6 Years Consecutively; New PE Players Grow
50
Silicon Valley Add: 125 University Ave. Suite 88 Palo Alto, CA 94301 Tel: +1 650 461 8100 Fax: +1 650 461 8101
Beijing Add: Floor 12, Tower A, Eagle Run Plaza, No. 26, Xiaoyun Road, Chaoyang District, Beijing 100125 Tel: + 86 10 84580476, 62588680 Fax: + 86 10 84580480
Shanghai Add: Rm. 5E, Crystal Century Tower, No. 567, Weihai Road, Jing An District, Shanghai 200041 Tel: + 86 21 62889090, 62886707 Fax: + 86 21 62886716
Shenzhen Add: Postbox #198, Rm 1605A, 16/F, International Chamber of Commerce Tower, No.168, Fuhua Road 3, CBD Futian District, Shenzhen 518048 Tel: + 86 755 88315318 Fax: + 86 755 88315328
Hong Kong Add: 2101, 21/F, Westlands Center, 20 Westlands Road, Quarry Bay, Hong Kong Tel: +852 2960 4611 Fax: +852 2960 0185
