Lunar Monthly Update
As we ring in the New Year, it’s déjà vu all over again in China, with market volatility giving rise to investor concerns. With this backdrop, we’d like to offer Lunar Capital’s reflections on the past and beliefs for the future. The first generation of private equity in China, or Chinese PE 1.0, was driven […]
Lunar Monthly Update
This month we would like to comment briefly on China’s macroeconomic environment. Recent economic data (Table 1) suggests the risk of a slowdown in 2012 is real. Compounding this is concern over the health of Chinese banks, non-performing loans within both the public and private sector, a deflating property market, and a slowdown in capital […]
Agriculture and Agribusiness in China
At our recent AGM, we discussed our belief in consumer goods, consumer services and agribusiness. We believe that demand in these areas will be driven by expanding domestic consumption, and in particular new consumption arising from the development of central and western China. Agribusiness is a sector where we are devoting considerable resources, including the […]
Lunar Monthly Update
Summary: Investors in China are experiencing a crisis of confidence driven by three concerns – corporate malfeasance, credit conditions and the macroeconomic environment. Good opportunities often emerge when confidence is low, and we remain confident in three long-term trends: the emergence of better-run companies, a growing consumer base and more equitable credit conditions. Lunar believes […]
Lunar Monthly Update
We believe the current environment for private equity investment in China is more compelling than it has been for the past several years. • Global fears have driven valuations lower world-wide. Chinese equity markets have performed poorly. Liquidity has tightened in China as policy makers address inflation, and volatility has risen. • This is the […]
Lunar Monthly Update
Our attention this month is focused on the second wave of the financial crisis and its potential impact on China. Risk of Contagion China weathered the first wave of the financial crisis well. We believe this was due to the “bottoms up” nature of the crisis — a break down in the availability of credit […]
The mystery of the Chinese consumer
Lily Li wears a lanyard with a little plastic card around her neck, even at weekends. It is a badge of honour: it shows that she has a white-collar job. (She is a secretary at Access Asia, a retail-research company in Shanghai.) She uses Apple earphones for the cheap Chinese mobile phone in her pocket, […]
White Elephant Hunting en route to West Lake
“I was recently in Shanghai and I took their high-speed train to Hangzhou. The brand new high-speed train is half-empty and the brand new station is three-quarters empty. Parallel to that train line, there is also a new highway that looked three-quarters empty. Next to the train station is also the new local airport of […]
Lunar Monthly Update
We remain confident that China is attractive for private equity investors. Long-term growth prospects remain robust, driven by ongoing urbanization, rising consumption, and the emergence of inland China. Capital markets continue to develop, broadening exit opportunities for private equity investors. Financing channels for private enterprises remain scarce, making private equity an attractive source of liquidity […]
Lunar Monthly Update
Transactions involving control are rare in China, and for the most part, unpopular. According to research by McKinsey & Company, buyouts accounted for just 17% of private equity investment from 2005 to 2010. Their rarity has stemmed, in part, from legitimate factors, including a historically complex government approval process, the reluctance of first-generation entrepreneurs to […]
