Renminbi funds

Along with the funding injected into China's multi-layer capital market, renminbi funds on the Chinese PE market are apparently ready to become more developed.

China's Social Security Fund had called for enlarging its investment in PE funds, and the China Securities Regulatory Commission lowered the access threshold for stockbrokers' direct investment in the second quarter.

Then local governments, headed by Shanghai and Beijing municipal governments, constantly created new policies and gradually removed the policy barriers in the foundation of renminbi funds in China. This, in turn, incurred another round of upsurges in the fundraising of renminbi funds.

Moreover, there were no US dollar funds raised in the third quarter, because more general partners delayed fundraising and more funds were discarded due to the persistent depression of the global economy.

PE funds worldwide

According to Preqin, a world-famous research institution, the third quarter saw a sharp drop of 55 percent in the aggregate fundraising amount of PE funds worldwide compared with that in the preceding quarter, staying at the lowest level since 2003.

PE investments steadily increased in gross amount with traditional industry accounting for a bigger proportion of investments, according to reports.

From the perspective of investments, the third quarter saw 20 investment deals completed on the Chinese mainland with $982.92 million.

The number of investment deals declined 31 percent from 29 in the third quarter of 2008 and climbed 53.8 percent from 13 in the second quarter of 2009.

The funding invested also dropped 62.2 percent compared with $2.6 billion in the third quarter of 2008, and soared 42.7 percent from $689 million (excluding one mega deal) in the second quarter.

Traditional industry

By industry breakdown, there were 14 PE investment deals in traditional industry sectors with $877.22 million disclosed, accounting for 70 percent and 89.2 percent of the total numbers and amounts of investment, respectively, in the third quarter.

Traditional industry sectors experienced a significant increase in both the numbers (up 53.8 percent) and amounts (7 percent) of PE investment in the previous quarter.

Broad IT claimed two investment deals worth $48 million in the quarter, exceeding services to take second place.

Against the backdrop of the launch of 3G and the growth enterprise market, PE funds that had ignored broad IT seemed to have expanded in scope to industries with potential such as broad IT.

In the third quarter, there was only one deal priced at $35 million in services. Other industries attracted very small investments.