One swallow doesn't make a summer. But here's another sign that China's private equity industry may be back on track.
Zhu Lei, managing director with Credit Suisse's Beijing office, is leaving to set up his own PE firm, according to Bloomberg.
He hopes to raise 9bn yuan for two PE funds focussed on opportunities in China. Interestingly, he is also hoping to tap overseas investors for $200m.
Despite the expected slowdown in foreign PE investments in China due to the credit crunch, domestic firms are expected to pick up much of the slack. As well as enjoying a competitive advantage against foreign funds in terms of ownership possibilities and tax structure, the domestic players are also becoming more competitive and less dependent on inefficient government investment strategies.
The credit crunch therefore could provide China's domestic PE firms with a golden opportunity to develop their own investment strategies while the western players pause for breath and wait for the crisis to blow over.
Zhu's move mirrors that of Goldman Sachs' star rainmaker in China Fang Fenglei, who set up a PE fund with Singapore's Temasek last year.
PE firms continue to be attracted to China despite the global slowdown, as they judge opportunities in the Chinese market to be better than in the west, helped in no small part by the Chinese government's stimulus package to boost domestic consumption.
According to the The Wall Street Journal, PE firms in China are confident a recovery is in sight and that the stimulus measures will benefit particularly consumer products companies with well-known brand names, such as Peak, the sportswear company, which earlier this week received PE funds — see this EngagingChina story.