BIZCHINA / Overseas Investment
Property market on VC's radar screen
By Hui Ching-hoo (China Daily HK Edition)
Updated: 2006-10-10 10:18
Europe's largest listed venture capitalist 3i yesterday said it was
eyeing the mainland's property market for new investments. And this
reflected global venture capitalists' (VCs) growing interest in the
sector that demands big investment and long-term commitments.
VCs invest largely on mainland's IT and consumer sectors, where they
could seek fat payoff with quick exit.
"There are about 300 million people on the mainland with big housing
demand... the market is growing strongly," Jamie Paton, managing director
of 3i Asia Pacific told China Daily yesterday.
Although the housing market slowed down a bit by the government's
tightening control, Paton believed the policy would be good for the
market in the long run. "Our investment is based on foresight, which
would not be affected by temporary fluctuation," he said. 3i used to seek
investments in the mainland's consumer market.
Recently the firm hit the headlines for buying a US$25-million stake in
Inner Mongolian hotpot restaurant chain Little Sheep, which has 703 chain
restaurants across the country and which is dubbed as one of the China's
Top 500 Enterprises.
"Little Sheep is a renowned nationwide restaurant chain. Through the
injection of 3i, the company could consolidate its domestic business and
make foray overseas," he added. 3i earlier appointed two members to the
board of Little Sheep.
"They used to be in the management of Burger King and KFC, with rich
experience in catering industry. We believe they could assist the
expansion of Little Sheep," he said. Paton said that the mainland
economy's growth momentum would be sustainable and sectors such as
retail, food, healthcare and energy would greatly benefit.
3i has struck 10 deals on the mainland and plans to invest up to US$1
billion in the market over the coming three to four years.
"The amount of every deal involved an investment ranging from US$25
million to US$100 million," Paton said.
3i usually enters partnership with mainland enterprises, in which it has
a stake between 20 per cent to 40 per cent. It exits by listing them.
3i so far has helped list three mainland companies.
Media firm Focus Media raised US$700 million through a listing on NASDAQ
in July 2005. Fire alarm manufacturer GST Holdings and foundry service
provider CSMC Technologies Corp are both listed in Hong Kong.
(HK Edition 10/10/2006 page3)
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