Managing China's $1.6tn private investment market

Shrinking venture capital and private equity funds show need for better regulatory oversight

Zhang Lei, chairman and chief executive of Hillhouse Capital Management Group, attends a panel discussion in Hong Kong. Hillhouse clinched 54 investment deals involving 71.2 billion yuan, up 690% from a year ago to a record, in the first eight months of this year. © Reuters

YUE YUE, WANG LIWEI and HAN WEI, Caixin

October 13, 2020 22:36 JST

Chinese venture capitalists and private equity investment funds are at a crossroads as the 10 trillion yuan ($1.6 trillion) market faces a slowdown worsened by the COVID-19 pandemic. The once-freewheeling industry needs more effective regulatory oversight and self-discipline to stop a three-year decline, analysts said.

In the first half of 2020, 1,069 venture capital (VC) and private equity (PE) investment funds raised 431.8 billion yuan in China, down 29.5% from a year ago and extending a slide since 2017. The number of investment deals totaled 2,865, a drop of 32.8%, according to data from Zero2IPO Research.