Ten new private equity funds raised a combined US$12.02 billion in the second quarter of this year in China, jumping 107.6 percent from a year earlier but losing 39.9 percent on a quarterly basis, according to the Zero2IPO Research Center.

Despite the influence from the subprime mortgage crisis, PE funds are still optimistic about China's real estate industry as capital raised for real estate funds accounted for 8.1 percent of the total, compared with 2.5 percent in the first quarter, the consultancy firm said in a report yesterday.

PE firms invested US$2.56 billion into 37 Chinese businesses in the period, and investments in traditional industry accounted for 63.3 percent, the report said.

Hi-tech industry accounted for 21.4 percent of the total investments, partly because of a rapid increase in the amount invested in the clean energy sector, it said.

Investments in Shanghai increased to US$130 million, or 5.1 percent of the total, in the quarter from 3.7 percent a quarter earlier, while Guangdong, excluding Shenzhen, received 15.6 percent of the total PE investments and Beijing received US$394.88 million.

PE exits remained stagnant as the number of total exits decreased to only five because of the continued worsening of international capital markets, the sharp plummeting of the domestic stock market and new strict regulations, it said.

"We predict that when the stock market begins to see signs of a rebound there will be more exits especially in the forms of IPO and secondary offers," the company said.

The company expects that the fund size is most likely to exceed US$50 billion this year and more than US$10 billion of funds will be injected into Chinese businesses.

(Shanghai Daily July 25, 2008)