Barbarians in love

Private equity in China
私募基金在中国

Barbarians in love
热恋中的野蛮人

Global private-equity firms are seduced by the China dream
中国梦正在吸引着全球的私募基金公司
Nov 25th 2010 | HONG KONG AND NEW YORK | from PRINT EDITION




SO MANY conferences are held in Hong Kong that it is hard to believe one could ever be full. Yet in mid-November the Asian Venture Capital Journal (AVCJ) was forced, with regret, to turn away customers from its private-equity meeting. There was simply no room for the hordes of European and American investors stopping in Hong Kong on their way to China.

最近在香港召开的会议多到不可思议。然而在11月中旬召开的私募股权投资基金（下文简称PE）会议上，亚洲创业投资期刊集团(Asian Venture Capital Journal) 还是被迫惋惜地拒绝了许多顾客，因为已经没有门票提供给那些蜂拥在香港以期进入中国大陆的欧美投资者了。



Three widely held opinions about China (it's big, expanding and filled with entrepreneurs) and some spectacular returns on deals mean many buy-out big-shots are reinventing themselves as China hands. Capital-raising, trivial a decade ago, is booming after a blip in 2009 (see chart). So far this year China-focused funds have accounted for more than 9% of global fund-raising, up from 1% in 2007, according to Thomson Reuters, an information firm.

关于中国市场的三个主流看法（巨大，正在扩张且到处都是企业家）加上巨大的投资回报使得许多并购巨头正在以中国通的形象重新示人。十年前几乎还是空白的PE领域，在经历2009年的短暂低谷后正在急速发展（见图表）。根据一家名为汤森路透（Thomson Reuters）的情报信息提供商的数据，投资于中国的基金已经超过了世界总资金募集量的9%，而2007年时仅占1%。

The usual suspects, including Carlyle, TPG, KKR and Blackstone, have set up China-related operations. All told, there are 167 registered foreign managers of private-equity funds in China and 265 domestic ones, according to Asia Private Equity Research, up from almost none a decade ago. Estimates of China's unregistered firms bounce from 3,000 to 10,000 and above. Many prominent local and Western firms are populated by the children of China's leaders, who bring powerful connections and a degree of political protection.

包括凯雷集团（Carlyle），德克萨斯太平洋集团（TPG），科尔伯格・克拉维斯集团（KKR）和黑石集团（Blackstone）这些江湖老大们都已经开始运作与中国有关的项目。根据亚洲私募股权投资基金调查（Asia Private Equity Research）的结果显示。在中国总计有167个注册的由外国人管理的PE基金，由中国人管理的则有265个，在十年前这个数字几乎还是零。中国未注册PE公司的数量估计已从3000个增长到了10000个以上。许多在一定区域较突出的公司和西方公司都有中国领导人的孩子在其中任职，他们能为公司带来强大的人际关系网和一定程度的政治保护。

There is a gap in China's financial system that private equity can fill. Most capital is channelled through state-controlled banks that offer low returns on deposits and cheap loans to state-controlled companies. Both savers, who want better returns on their investments, and entrepreneurs, who need capital, should be keen on bypassing the state-bank system.

PE基金能够填补中国的金融系统中的一个缺口。因为大多数资金在国有银行渠道中流动，为存款提供低回报并为国有公司提供低息贷款。所以那些期望在投资上有高回报的存款者们和需要资金的企业家们可能都乐于绕过国有银行系统。

China is also particularly seductive for Western buy-out firms. They are keen to find new deals there, now that the boom in leveraged buy-outs in rich countries is over. They also want to ensure that the companies they already own do more business in the Middle Kingdom. Blackstone recently held a gathering in China for 33 chief executives of its portfolio companies to discuss, among other things, how to expand their activities there.

中国也引诱着那些西方的并购公司们。如今杠杆收购在富裕国家已不再风靡，这些公司热衷于在这里寻找新的买卖。他们也希望确保自己已经持有的公司能在这个中央王国多做一些生意，黑石集团（Blackstone）最近将其在中国所投资33家公司的首席执行官召集在了一起，在会议中便涉及了如何在中国扩张他们的公司。

Western private-equity firms are also keen to raise new capital from China. Yuan-denominated funds, recently made available to non-Chinese firms, face less red tape and enable private-equity outfits to team up with local governments to raise money and help locate deals. The largest American firms are all keen on developing such vehicles.

西方PE公司也对从中国募集新的资金充满兴趣。外国公司在最近已经接受了以人民币基金，人民币基金不用再面对繁琐的程序，同时PE团队能与地方政府携手集资并推动交易的产生。那些美国的公司巨头们对此充满期待。




To the extent that aggregate records for private-equity returns exist, results in China are strong (see table). At best, however, these are only vague indicators. Since the industry is new, the sample of deals is pretty small. Because of the pervasive opacity of China, failures are quietly buried. And concern about criticism from Marxist die-hards means that even successes are often hidden.

就已有的PE收益记录来看，中国的成绩是非常好的（见表）。然而这些记录充其量只是一些模糊的指标，由于这是一个新生行业，样本容量非常之小。因为中国在各方面还不够透明，很多失败的交易都被掩盖了。而且考虑到来自马克思主义顽固分子的批评，甚至连许多成功的交易也经常会被掩盖。

Those deals that do get attention tend to be big, successful and involve foreign firms. In June TPG sold a controlling stake in Shenzhen Development Bank for many times its original investment. On a percentage basis, Baring Private Equity is thought to have made even more on an investment in Hidili Industry, a coal producer that was recently refinanced. TPG will probably make another fortune if, as planned, a public offering goes through for Grand Auto, a car-dealership chain in second-tier cities. Carlyle got a rare opportunity to invest in a leading insurance company, China Pacific Life, and made a killing when the insurer listed in Hong Kong last year.

那些的确得到关注的交易往往庞大，成功而且有外国公司参与其中。在六月份，德州太平洋集团（TPG）以高出原始投资很多倍的价格卖出了它在深圳发展银行所持有的控股股份。在百分比的基础上，霸菱投资（Baring Private Equity）被认为在最近一次投资中赚得甚至更多，投资对象是恒鼎实业（Hidili Industry）,一家刚刚进行再融资的煤炭生产商。如果TPG为广汇汽车（Grand Auto）设计的公开募股顺利的话，它还有可能再赚一笔，后者是一家二线城市的连锁汽车经销商。凯雷集团（Carlyle）则得到了一个少有的机会，它得以向太平洋人寿（China Pacific Life）――一家主要的保险公司投资，并在其去年香港上市的过程中大赚了一笔。

A further relaxation of capital-raising rules is another boon. In August officials lifted a restriction on registered insurance companies placing money with private-equity firms: they may now invest up to 5% of their assets this way. And yuan-denominated funds may eventually be opened to non-Chinese investors.

对融资监管条例的进一步放宽是另一利好消息。8月份，官方解除了对注册保险公司投资于PE公司的限制：保险公司最高可将其总资产的5%投资于PE公司。同时人民币基金可能最终允许向外国投资者开放。

No one does indiscriminate bullishness better than the private-equity industry. Yet for all the buzz, the reality of operating in China is likely to test even its professional optimists. For a start, three of the techniques buy-out shops often use in the West―dismemberment, leverage and tax avoidance―are unfeasible in China.

人们对PE行业的信心正无可比拟。但在这一片嘈杂之中，中国的PE运作现状可能要考验那些即使是持乐观观点的从业者。作为一个开始，分割、杠杆收购、避税这三项西方并购公司经常使用的手段在中国仍是很难实施的。


There ain't no RJR Nabiscos here

这里可没有雷诺兹-纳贝斯克

Gaining control of acquired companies, which is usually deemed essential for buy-outs, is also difficult. Many industries are considered "strategic" and therefore off limits, or open to investment only in exceptional cases, such as finance. Across all sectors a typical Chinese private-equity investment is a non-controlling stake of 15-40% in an operating company, with the money intended (but not always used) as growth capital. For dollar-based funds, which had been the norm until yuan-denominated ones took off, laborious government approvals are required to close deals. These can take months or even years. Those who have attempted to take a majority stake in a company, as Carlyle did in 2005 when it tried to buy 85% of Xugong Group Construction Machinery, China's largest maker of building machinery, have tended to fail.

想要获得所投资公司的控制权也很困难，而这对并购公司来说却通常是非常重要的。许多行业被认为是"战略性"的，因此被禁止进入，或者如金融界那样仅在例外的情况下允许投资。典型的中国PE投资是这样的：在一家公司中持有15%-40%的非控制性股份，所投资金预计用以发展（但并不一定会被使用）。花上数月甚至是数年的功夫以获得政府许可来达成交易，这在人民币基金蓬勃发展之前，对于美元基金来说是家常便饭。那些试图获得某家公司多数股权的努力则往往面临失败的结局，比如凯雷集团在2005年曾试图购买徐工工程机械集团85%的股份，这是中国最大的工程机械制造商，结果不言而喻。

Given these hurdles, finding suitable investments is hard. KKR raised a $4 billion Asian fund in 2007 that, at the time, was supposed to be largely focused on China, but it is widely believed that only a fraction of the money has been spent. Since 2005 private-equity firms have raised more than $57 billion for investment in China, according to Preqin, a research firm, but much of that is thought not to have been deployed.

在有这些障碍的情况下，想找到合适的投资是困难的。科尔伯格・克拉维斯集团（KKR）曾在2007年建立了一个40亿美元的亚洲基金，在当时被认为其会将主要精力集中于中国，但该基金目前只用掉了很小一部分的资金。来自调查公司Preqin的数据显示，从2005年起，PE公司们以在中国投资为目的而募集的资金超过570亿美元，但其中大多数被认为并没有得到有效利用。

As a result, too many firms are chasing too few deals. One executive at a leading American buy-out firm says that, more than any potential regulatory issue in China, he is concerned about the "intense amount of competition" from local firms, which outmanoeuvre Western firms on deals and also poach their staff.

因此，想做生意的公司太多，而能做的买卖又太少。美国某主要并购公司的一位执行官说道，比起中国潜在的监管问题，他更担心来自本土公司的"过度竞争"，因为本土公司在交易中总能胜过西方公司一筹，而且会使用挖墙脚这样的手段。

Faced with the problem of finding suitable private targets, many of the bigger firms have turned to PIPE deals: the acronym stands for "private investments in public equity". These typically involve buying a large slice of a Hong Kong-listed company. That avoids the drudgery of sorting out a private firm, but makes it rather hard to justify large fees. The alternative is gruelling: doling out stakes of $5m-10m and certainly no more than $100m, and only after painstaking due diligence.

面对无法找到合适的私有公司作为投资目标的困境，许多大公司转而寻求PIPE交易，即私人股权投资已上市公司股份。这类交易通常需要购买在香港上市公司的大量股权，这虽免除了整治所投公司方面所需的冗长繁杂的工作，但却需要付出庞大的费用。另一种选择则会让人受尽折磨：施舍出5百万到1千万美元的股份（当然不能超过1亿美元），并且先得付出大量细致的辛勤工作。

Victoria Capital, a small firm whose managers have a long history in China, invests only after reconstructing a target company's financial statements using original receipts. Arc China, another small firm with experienced managers, invests only in companies which collect revenues in an obviously verifiable way, such as a retail company that receives fees from franchisees at a single point, rather than from a string of wholly owned stores.

Victoria Capital是一家小型投资公司，其负责人对中国的情况非常了解，这家公司只投资那些能够使用收条正本重建财务报表的公司。Arc China这家小公司也拥有经验丰富的管理者，他们只投资那些有清晰且可证实的盈利模式的公司，比如能够依靠特许经营权盈利的零售公司，而不会投资于一堆全线自有的直营商店。

Steven Barnes, managing director of Bain Capital, a private-equity firm, told attendees at the AVCJ conference that it takes twice as many people to manage investments in China as in the West. That may be optimistic. What is more, one of the most important parts of private-equity investing can barely be managed at all. Since firms typically hold only a minority stake, their ability to realise money for their holdings is limited. Recent returns have been almost entirely the result of a strong market for initial public offerings in Asia, which has allowed insiders to receive large payouts. Citigroup reckons that 30% of the recent offerings were backed by private-equity firms, with China heavily represented. If the market flags, that door will shut and the next round of successful conferences in Hong Kong may have less to do with tips on getting into China than with advice on getting out.

PE公司Bain Capital的常务董事Steven Barnes在亚洲创业投资期刊集团（AVCJ）的会议上说道，比起在西方的情况，在中国需要花上两倍的人力去管理投资，这可能还是乐观的看法。更让人担心的是，PE投资最重要的部分之一在这里却几乎无法进行管理。由于PE公司通常只持有少数股权，他们出售手中股份的权力受到限制。最近的回报几乎全是亚洲IPO强势市场的功劳,这让那些内部人士收益颇丰。花旗集团（Citigroup）认为近期的募股有30%都是由PE公司在后支撑，中国的情况尤为突出。如果市场转弱，通往中国的那扇大门就会关上，到了那时，下一轮在香港召开的会议恐怕就不会再讨论如何进入中国，而该为如何逃出中国而出谋划策了。