O'Melveny Partners Discuss Investment Trends at SuperReturn China Conference 2012

March 27, 2012



Julie Fei                                                        Piper Hall                                   

O’Melveny & Myers LLP                            O’Melveny & Myers LLP          

213.430.7792                                                 202.220.5022     

213.440.7792 (cell)                                       202.870.1800 (cell)                         

jfei@omm.com                                           phall@omm.com       


BEIJING -- MARCH 26, 2012 -- O'Melveny & Myers LLP's lawyers will be analyzing RMB onshore and offshore fund developments, the latest trends and opportunities across Asia, the rise of Chinese GPs, successful onshore exits and more at the 2012 SuperReturn China Conference, which the Firm is sponsoring. The conference is the largest private equity conference of its type on the mainland and is attended by local and global limited partners and general partners. It will be held March 26-29 at the Shangri-La Hotel, Beijing. O'Melveny partners, Howard Chao, Dean Collins, James Ford, Qiang Li, Larry Sussman and Walker Wallace, will participate in SuperReturn China 2012.


On March 26, Mr. Sussman, managing partner of O'Melveny's Beijing office, together with the O'Melveny funds team will present an in-depth, one-day workshop on RMB Fund and Offshore Fund Structuring.


On March 27:

  • Mr. Chao, senior partner of O'Melveny's Asia practice, will lead the conference's keynote GP interview, with Chang Sun, managing director of Warburg Pincus.
  • Mr. Collins, head of O'Melveny's Asia fund formation practice, will moderate a session on the Regional Outlook on Latest Trends and Developments Across Asia, with industry veterans KY Tang of Affinity Equity Partners and Maarten Ruijs of CVC Asia Pacific. 
  • Mr. Wallace, a partner in O'Melveny's Shanghai office, will lead a talk focusing on the recipe for successful investments exits onshore in China.


On March 28, Mr. Li, managing partner of O'Melveny's Shanghai office, will join a discussion focusing on Qualified Foreign Limited Partners (QFLP) in China.


In advance of the conference, O'Melveny partners made comments on a number of key trends in China's private equity market:


Larry Sussman on Competition among RMB Funds

  • "Chinese domestic GPs still dominate the lucrative fundraising space and the deck is largely stacked against foreign PE funds, which cannot yet obtain NDRC approval to manage RMB funds and develop the track record they need to make the breakthrough into the 'promise' of substantial fundraising in China."
  • "We are seeing foreign GPs recalibrating their strategies for the second wave of RMB funds. I expect to see breakthroughs as they are able to unlock some of the Chinese LP money that's out there."


Howard Chao on the Current IPO Window

  •  "Companies have begun to focus on raising money privately rather than through a public listing, and this trend is only likely to grow in the months ahead."
  • "The IPO market has always been highly cyclical. Experienced PE investors continue to focus on building businesses, not just on completing IPOs."
  • "Even in a tough market, a solid company can usually complete an IPO. It's like selling a house in a down market: you can always sell if you are able to have realistic expectations on how much you'll get."
  • "Based on our research, we have found a surprisingly high percentage of Chinese domestic IPOs were companies backed by domestic Chinese private equity / venture funds."


Dean Collins on the Rise of Chinese GPs:

  • "The rise of Chinese GPs on the international PE stage is already well underway.  International PE fundraisings for China are no longer focused on just the international brands or on other GPs who have a 'Western feel' about them, but also on very local teams who have been successfully managing RMB for local investors.  Curiously, some of these firms have limited English language capabilities and many international LPs are having to deploy Mandarin-speaking talent in order to interact with them in a meaningful way."

Walker Wallace on Successful Onshore Exits:

  •  "It is important to remember how new the private equity and venture capital industries are in China.  IPOs have been the traditional exit strategy, but with investors becoming increasingly sophisticated, we are going to see a ramp up in M&A, trade sales and roll-ups."
  • "With the market placing a discount on Chinese companies, there are great values to be had. The trick is making sure you're getting in bed with the right company." 
  • "In China, a M&A exit has traditionally been more difficult with the first generation of founders seeing companies as their babies. Deals like Lotte's purchase of Luckypai show us that the game has changed. Greater M&A activity is great news for PE funds."
  • "Generally we're seeing more M&A activity. There's now a pipeline of M&A deals as first generation founders consider trade deals. This is making the market easier for PE funds to succeed."


Howard Chao On Trend of China-based Companies Delisting in the US:

  • "China-based companies listed in the US are looking at their low share prices, high regulatory burden and associated costs of being listed, and the increasing threat of litigation.  Some are asking, 'Is it really worth it for us to stay listed here?'  Weighing further in their minds are the higher valuations available from relisting in Hong Kong or the mainland."


Larry Sussman on Regulation of PE Funds in China:

  • "The general view is that the NDRC is tightening its control over the PE industry and is planning to crack down on illegal fundraising."


About O'Melveny & Myers LLP's Asia Practice

O'Melveny & Myers LLP began its practice in Asia nearly 25 years ago, and over this time we have become one of the most respected and full-service legal service providers in the region.  The Firm maintains large offices in the most important political and commercial centers of Beijing, Shanghai, Hong Kong, Singapore, Tokyo, and Jakarta*.  Most of our lawyers are native to the region, understand the local law and business practices, speak the local languages, and, most importantly, function as an integrated team that taps the Firm's vast resources in Asia and globally, delivering value and expediency to its clients.  For more information, please visit www.omm.com.

*in association with Tumbuan & Partners


About O'Melveny & Myers LLP

With approximately 800 lawyers in 15 offices worldwide, O'Melveny & Myers LLP helps industry leaders across a broad array of sectors manage the complex challenges of succeeding in the global economy. We are a values-driven law firm, guided by the principles of excellence, leadership, and citizenship. Our commitment to these values is reflected in our dedication to improving access to justice through pro bono work and championing initiatives that increase the diversity of the legal profession. For more information, please visit www.omm.com