SOURCE: Cambridge Associates

Cambridge Associates

July 07, 2010 09:03 ET

Media Advisory: Cambridge Associates Chinese Private Equity Expert Available

As Chinese Private Equity Develops Track Record, Investors Face Challenge of Parsing New Types of PE Risks and Opportunities

BOSTON, MA--(Marketwire - July 7, 2010) -  As private equity investors eye China more enthusiastically, they need to be prepared to review and augment their due diligence criteria -- and make sure they're applied rigorously, according to Cambridge Associates, the provider of independent investment advice and research to institutional investors and private clients.

"The private equity market in China is, indeed, attractive, assuming thorough due diligence and manager selection. The pace of change in the country, dynamism of the market and the entrepreneurial spirit are astounding, but it's important for investors not to get blinded by this excitement," said Miriam Schmitter, Managing Director of International Private Equity Research in Cambridge Associates' London office.

Ms. Schmitter is available to discuss the private equity landscape in China, particularly from institutional investors' perspective. During a discussion, she could address...

  • Investment focus: The focus on private equity in China is on small but growing companies, whereas elsewhere in today's markets it's now mostly on distressed companies having trouble staying afloat.

  • Exit track record: Private equity managers in China have spent years trying to prove they can profitably exit investments; some firms now have a sufficiently long track record.

  • Whether Chinese PE firms are institutional quality: Risks result from the fact that even the most experienced firms are investing only their second or third fund -- and that many have yet to prove they are of institutional quality as measured by policies, processes and professionals. (All firms -- whether small and new or large and established -- had to operate in a country in which transparency, corporate governance and government regulation were among the undeniable risks facing prospective investors.)

  • Real vs. Perceived Risks: Some perceived risks may actually not be real. For instance, in the West, prudent investors tend to gravitate to PE firms that are partnerships of equals, i.e., where there are a number of strong senior professionals who complement each other. But, in China, hierarchy is important, so if one person leads and dominates the organization, that could be a positive. (If leadership isn't defined, it might not be a stable organization.)

  • The bubble factor: Is PE coming of age in China just as the country is experiencing an investment bubble -- and does that present risks and/or opportunities?

  • The importance of manager selection: Due diligence is critical in parsing excellent managers and those who may simply be trying to take advantage, opportunistically, of the private equity trend in China.

To schedule a conversation with Miriam Schmitter, please contact Itay Engelman at Sommerfield Communications, Inc. at 212-255-8386 or Itay@sommerfield.com.

About Cambridge Associates

Founded in 1973, Cambridge Associates delivers investment consulting, independent research, and performance monitoring services to approximately 800 institutional investors and private clients worldwide. Cambridge Associates has advised its clients on alternative assets since the 1970s and today serves its clients with more than 180 professionals dedicated to consulting, research, operational due diligence, and performance reporting on these asset classes. The firm compiles the performance results for more than 3,900 private partnerships and their more than 56,000 portfolio company investments to publish its proprietary non-marketable alternative assets benchmarks, of which the Cambridge Associates U.S. Venture Capital Index® and Cambridge Associates U.S. Private Equity Index® are widely considered to be the industry-standard benchmark statistics for these asset classes. The venture capital data is used by National Venture Capital Association (NVCA) for its quarterly benchmarks. Cambridge Associates has over 950 employees serving its client base globally and maintains offices in Arlington, VA; Boston, MA; Dallas, TX; Menlo Park, CA; London, England; Singapore, and Sydney, Australia. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.

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