Behind US private-equity investors’ growing appetite for Chinese start-ups
Buyout firms are shifting into venture-type investing to capture the wave of Chinese high-growth start-ups as finding domestic targets gets tougher
When Apax Partners’ billion-dollar Apax Digital fund last month led the US$60 million latest round of venture funding for five-year-old SoYoung Technology Co, a Beijing-based plastic surgery social network, it was the latest example of US private-equity investors’ voracious appetite for early-stage Chinese companies.
Investment in China’s fast-growing technology sector is at its highest level in years. Buyout funds that typically take publicly listed companies private, are looking to invest billions in young start-ups such as SoYoung.
Apax, a private-equity giant with offices in New York and London, was known over the past 40 years for buying out listed companies in tech and health care. It is now expanding into new territory, betting on edgy fledgling Chinese businesses looking for investors.
Another investor in SoYoung’s latest financing, CDH Investments, also started as a private-equity firm in 2002. The firm branched out into venture investing in 2015.
Both Apax and CDH have joined SoYoung’s other backers – MatrixPartners China and Trustbridge Partners – veteran venture-capital funds that have extensive experience in investing in Chinese start-ups.
