Delivering Value Creation
Much of the discussion of our operational involvement in our portfolio revolves around growing top line revenues, controlling costs and streamlining decision making. These are goals that we must drive through deeper, more granular involvement in our companies. This month we highlight some of the areas for improvement within our businesses that have been particularly […]
Incentivizing Minority Shareholders in a Buyout Deal
Chinese private equity has been overwhelmingly characterized by pre-IPO deals and growth capital investments whereby PE returns were driven by the deployment of investment capital, not human capital or sweat equity. Most firms lacked the culture, will and expertise to take on operationally challenging investments. Meanwhile the scale of buyout opportunities has grown, driven by […]
A Solution to Stress and Succession
Stressed out sextuginarian and septuginarian entrepreneurs are saddled with succession issues, as are their quadregenriarian and quinquagenerian brethren. A 2013 survey of privately-held small- and medium-sized private enterprises conducted by Shanghai Jiaotong University found that 70% will face succession issues within the next five to ten years, and less than 20% of next-generation heirs and […]
Burgeoning Bourgeois
The Chinese government has delivered on its promise of creating wealth for the masses, giving consumers purchasing power unimaginable even a decade ago. A recent study by McKinsey stated that the number of upper-middle class households with income between RMB 106,000 and RMB 229,000, has grown from 6% of urban household in 2010 to 14% […]
Invest in China’s Consumers, says PE veteran
Amid a slowdown in China’s economy, the consumer sector remains relatively buoyant with Nielsen’s consumer sentiment index in Q2 2013 rising two index points to 110 from the previous quarter, and up four points from same period last year. Lunar Capital founder and managing director Derek Sulger, who is based in Shanghai, spoke to AsianInvestor […]
The Evolution of Retail Formats in China
China’s retail format is evolving as Chinese consumers grow wealthier and savvier. To generate sustainable growth going forward, businesses need to upgrade their retail platforms. Generally speaking, in developed markets where GDP per capita reaches USD 8,000, new retail formats, such as supermarkets, shopping malls and hypermarkets tend to become more attractive to consumers. China […]
Meet Our Managers – Jerry Mao
Jerry Mao Partner at Lunar Capital In many ways, Lunar is a boutique, and has not had the privileges associated with buying a large firm over the past few years. We chose not to focus simply on fundraising and growing our AUM, but rather took on the challenge of differentiating through our unique focus on […]
Control Over Our Destiny
China’s CSRC recently undertook what the private equity industry has dubbed the harshest IPO approval process in history. After an eight month freeze, the CSRC suspended the IPO application of 269 companies, almost 1/3 of the 900 companies in queue. This heavy-handed approach dealt a blow to the IPO dreams of many PE firms and […]
Safety First: Investing in China’s Food Supply Chain
Driven by rising disposable incomes and lower confidence in food safety, Chinese consumers are willing to pay a premium for quality. PE firms have identified the opportunity, but taking it can be difficult. Fifteen years ago, Charles Shao left his career as a technology investor in the US and returned to China to set up […]
For Private Equity, Door to Deals Opens in China
Private-equity investors, long shut out from getting controlling stakes in Chinese companies, are beginning to find mainland entrepreneurs increasingly amenable to outside help. These “first-generation entrepreneurs” — people who took advantage of the liberalization of China’s economy starting in the late 1970s — began their operations on a small scale, with modest amounts of capital. […]
