China sounds out foreign buyout groups over boosting inward investment

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Beijing’s finance regulator has been courting some of the world’s largest private equity groups to keep investing in China, as the authorities seek to ease foreign investors’ concerns over faltering growth and unpredictable policymaking. 

Fang Xinghai, vice-chair of the China Securities Regulatory Commission, addressed executives from more than 30 global venture capital and private equity firms at a rare symposium on Friday to discuss investment in the world’s second-biggest economy, five people with knowledge of the meeting said.

Executives from KKR, Blackstone, Carlyle and Warburg Pincus attended, as did Neil Shen, founder of Sequoia Capital’s China unit, which is being spun out and renamed HongShan.

The symposium was part of a concerted effort by the authorities to re-engage with foreign investors and business. Also on Friday, the Ministry of Commerce summoned to a roundtable discussion more than 30 representatives from foreign companies, along with the American Chamber of Commerce and its counterparts from the EU, Japan and South Korea.

Assistant commerce minister Chen Chunjiang said China had put foreign investment in a “more important position” and aimed to build more sustainable expectations for business.

The Beijing symposium was the first of its kind between financial authorities and groups that manage US dollar funds. Their appetite for China deals has fallen as Washington works on plans to step up its screening of US investment in the country and after Beijing cracked down on its fast-growing internet sector and took greater control over foreign listings.

Capital raised by Greater China-based private equity and venture capital funds fell to $36.8bn in 2022, significantly lower than the average of $148.9bn between 2019 and 2021 and a peak of above $300bn raised in 2017, according to the data provider Preqin.

During the meeting, authorities did not offer specific incentives or guidance, the people said. Instead, the global investment groups were asked to share their outlook for China’s economy and encouraged to suggest ways to make it easier to invest in the country. The discussion also covered smoothing the way for Chinese companies to list overseas, the people said.

The charm offensive comes as investment by many US buyout groups has virtually ground to a halt. Private equity firms are unsure of how they might eventually exit investments they make in China, after the China Securities Regulatory Commission introduced tighter rules for overseas listings.

China’s economy grew less than 1 per cent in the second quarter of this year compared with the previous three months, fuelling concerns of a vicious cycle of economic downturns.

Seventeen investors spoke during the symposium, which lasted for about an hour, with some attendees joining in person and others by video link, a person with knowledge of the event said. The CSRC did not respond to a request for comment on the symposium.

Attendees also included Chris Sun, a China partner from KKR, Michael Hui, head of China private equity at Goldman Sachs, and executives from Singaporean state-owned fund Temasek, the Canada Pension Plan Investment Board and HarbourVest.

Regional houses such as Hillhouse, PAG and IDG also attended, the people said. The firms did not comment.