《中国日报》 2007年2月12日
作者：唐麦（Michael Thorneman）, 白伟历（Vinit Bhatia）

全球的私募股权如今都将目光聚焦在中国市场。自2000年起，中国私募股权的年复合增长率为74%。2006年，大中华区（包括中国内地、香港和台湾）的私募股权高达100亿美元，成为亚太地区第二大私募股权市场，仅次于澳大利亚。大中华区的私募股权项目目前已占亚洲总量的18%。但是，对300多家在中国已设立公司的私募股权公司来说，做出正确的投资决策正变得越来越复杂。一方面，公开交易的股权价格攀升，推高了潜在目标公司的价值。另一方面，监管者也加强了对私募股权投资者的监管。

In the world of private equity, all eyes are on China. At about US$10 billion, Greater China including the Chinese mainland, Hong Kong and Taiwan was the second-largest market for private equity in Asia in 2006,with a compounded annual growth rate of 74 percent since 2000.
Only Australia received more private equity. Greater China now represents 18 percent of all private equity activity in Asia.

But for the more than 300 private equity firms that have set up shop in China, placing the right investment bet is becoming increasingly complex.

For one thing, elevated prices for publicly traded equities have driven up the value of potential target companies.

Another complicating factor: Regulators have tightened the reigns on private equity investors. With so much money chasing a limited number of high-quality companies, smart private equity firms are differentiating themselves by honing four skills:

First, they are choosing wisely.

Private equity players have always started with a clear thesis of how value is created. In China today, three investment hypotheses are particularly promising. The first involves helping companies do a better job of penetrating export markets; that was a major impetus for Texas Pacific Group, General Atlantic and Newbridge Capital to invest US$350 million in Lenovo for its purchase of IBM's PC division.

In addition, they are targeting dynamic new sectors benefiting from the rise of a consumer class.

That's why private equity group 3i plans to invest up to US$200 million in China annually, with a focus on China's food and beverage industry. 

The last recognizes that selected industry niches home appliance manufacturing, for example are becoming globally competitive players. 

Second, they are exercising quiet influence.

Even when they lack controlling interest, fund managers like Morgan Stanley, Actis China Investment Company and CDH China Fund, put their know-how and range of contacts to use with quiet authority.

The group invested US$25 million in China Mengniu Dairy Company in 2002 and another US$35 million a year later for 28 percent control, working behind the scenes to help the company expand, innovate, focus on quality and, critically, become a Western-style marketing phenomenon.

Ultimately, the investors helped underwrite the dairy's successful initial public offering (IPO) on the Hong Kong Stock Exchange in 2004. 

After two years, the private equity investors earned an estimated four times their original investment, while Mengniu continues to thrive. 

China's largest milk producer by sales volume, the public company's net profits rose 43 percent in 2005.

Third, they are over-investing in due diligence.

Due diligence is a difficult task anywhere, but in China, it's more daunting and more important.

Unofficial payments and other hidden costs are part of doing business in China, and they aren't reflected in a profit-and-loss statement. Because published accounts aren't as transparent as they are in other regions and sources of information are inconsistent, it's hard to get a handle on true costs and industry competitors.

Meanwhile, markets are fragmented and rapidly changing.

To compensate, private equity investors exercise more rigorous fact-gathering and seek information of a higher grade of detail than in other regions.

They focus on primary sources of information, talking to customers to help understand the market and to different channel players to learn how margin structure works.

They track pricing at stores. They piece information together by comparing notes from wholesalers and retailers. It's likely that such due diligence led investors Blackstone and Bain Capital to pull out of its deal with China's home appliance and electronics manufacturer Haier to acquire Maytag.

Among other important factors, thorough due diligence no doubt found that Haier simply didn't have the ability to compete with Whirlpool, whose bid had increased Maytag's price tag.

Fourth, they are staying nimble.

US-based private equity firms usually think in terms of a three- to five-year holding period for the companies in their portfolios.

But China's markets seldom let investors choose when to sell. Indeed, investors must be prepared to bail out at the right time, when influence over an entrepreneuros becomes harder to wield, when M&A activity picks up in China or when a buyer emerges before an intended deal comes along.

Three years after it was founded by two entrepreneurs in Shanghai, private equity-backed online auction house EachNet.com was offered the opportunity to sell one-third of the company to eBay for US$30 million. A year later, eBay offered to buy the remaining two-thirds for an additional US$150 million.

The private equity investors needed to be nimble enough to sell out earlier than expected.

But they might just as easily have needed to exercise the flexibility to invest more money than planned, if that had been necessary. 

Buyout firms that learn to exercise the disciplines of building relationships, spotting emerging opportunities, quietly influencing outcomes, exercising strong due diligence and staying nimble will be best able to reap the rewards of a market where East and West are meeting for mutual benefit.