Ben Cavender

Private equity firms are rushing into China, but it is not always a smart move, tells business analyst Ben Cavender in Pensions&Investments, although the market is maturing.


However, that’s not to say all of those investments were good moves.

“It’s fair to say a lot of companies out there that are receiving capital aren’t necessarily the greatest companies that you might want to be putting money into,” said Benjamin Cavender, associate principal at China Market Research Group, Shanghai, because there’s more money chasing fewer good opportunities.

Meanwhile, exits from private company investments via initial public offerings — the predominant way in which managers retrieve capital from China investments — have been crimped by tougher regulation, lower valuations and the lack of investor interest for Chinese companies listing on exchanges in other markets…

Experts note the private equity market in China is maturing, with companies looking to build on past success by rising to global standards of corporate governance. “It’s not just a cash grab anymore, they’re also looking to private equity owners on governance issues as well,” China Market Research Group’s Mr. Cavender said.

More in Pensions&Investments.

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Ben Cavender on mistakes being made in localization by consumer firms

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