Much ink has been spilled recently among dealmakers and the media regarding the investment possibilities within the Asian markets. What is often missing during periods of irrational exuberance is any sober analysis that sorts through the hype so readers can make solid business decisions based on fact, not frenzy. Fortunately for you, The Deal is here to interpret the tea leaves.
In the current edition of The Deal newsweekly, Thomas M. Britt III provides a primer on what private equity firms should consider before developing an investment strategy in Asia. Britt, a partner in the Hong Kong office of Debevoise & Plimpton, points out that despite increased growth in M&A activity in Asian countries, buyouts are still uncommon even within highly industrialized countries such as Japan and South Korea. Tax considerations are still a major challenge for PE firms, Britt warns, and future success is entwined with the evolution of legal and tax structures throughout the many nations within Asia.
On the legal front, Yong Wang detailed in a recent Judgment Call column the new rules governing foreign strategic investments in China's listed companies, or FSI Rules, that became effective in February. Wang, an attorney in the corporate group of Kirkland & Ellis LLP writes that "the FSI Rules are part of China's larger initiative to revitalize its languishing stock market and solve two lingering issues that have haunted its stock market since its inception: poor governance and performance of listed companies, as well as illiquidity of the large number of nontradable shares held by the state, which account for about two-thirds of the aggregate value of the stock market." Revising the legal hurdles to foreign ownership and attracting investors from beyond China's borders is the key step to enervate the country's stagnant stock markets.
Meanwhile, China's burgeoning venture capital industry made big news Tuesday. Bejing-based Internet portal aggregation startup Oak Pacific Interactive announced it had taken on $48 million in late-stage growth capital from a group of U.S. and Chinese investors led by Greenwich, Conn.-based General Atlantic LLC. The deal is the largest venture capital funding in China's brief but burgeoning venture capital history. One of the additional investors was DCM-Doll Capital Management, whose founder, Dixon Doll, was the subject of a January cover story in The Deal. — Tom Groppe
This week's Industry Insight: Destination Asia
Yong Wang's Judgment Call: China, New M&A game in town
Oak Pacific lands $48M VC round
Dixon Doll: Timing isn't everything
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