Asia-focused private equity funds, which also invest in Greater China, have completed fund raising during the third quarter, to the tune of $18.8 billion. This is a 56 percent increase from the second quarter as well as a 94 percent increase from the same period last year, according to a report by Zero2IPO Group, a Chinese private equity service provider.
While growth capital funds remained in the majority, real estate funds accounted for 21.1 percent of capital raised, up from 8.1 percent in the second quarter.
The report noted that in China, the most popular sector was machinery manufacturing, which garnered $1.1 billion, approximately 44.8 percent of total private equity investments.
Within the country, the Hainan region received the highest investment capital injection at $777.1 million. Second was Henan at $615.8 million, followed by Liaoning at $300 million, and Hebei at $225 million.
There were six RMB-denominated funds in the third quarter, up from two in the previous quarter. Interestingly, the RMB-dominated funds raised more capital, supplanting other currencies as the dominant currency for the first time, said the report.
In terms of fund size, each RMB fund raised an average of $2.2 billion, a significant 435.7 percent increase from the second quarter, where fund size averaged $401 million per fund. In contrast, the amount raised by US denominated funds fell to 30.9 percent from 93.3 percent in the second quarter.
Recent Chinese regulatory changes favoring private equity investments have also buoyed investor optimism, revealed the report. The ban on the investment of social security capital in equity funds have been lifted. In addition, some securities brokers have been permitted to initiate direct investment funds, augmenting the capital supply. The relevant authorities also approved establishment and fund-raising procedures for the third wave of private equity funds.