China GPs must respond to the country’s economic slowdown by trying harder to pick sectors that can outperform – and where they can help drive performance – industry players told the Hong Kong Venture Capital & Private Equity Association’s (HKVCA) China summit. “Entrepreneurs not only need capital, but also advice from us. This is the time that strategic guidance has become critical; this is also the time for us to stay even more disciplined in value creation,” said Kevin Zhang, founding partner at Ascendent Capital Partners.
Structural change in the economy is also expected to generate opportunities, with drivers such as urbanization and industrialization joined by digital evolution. Travel is one of several services sector segments – alongside healthcare and media and entertainment – that China-focused GPs feel can generate attractive deal flow. Alex Zhang, founding partner at Hosen Capital, highlighted the food products and services space in particular, noting that it accounts for the bulk of domestic consumption but still faces quality and safety issues. Healthcare sector specialist Ally Bridge Group has created different vehicles for public and private markets. The firm’s hedge fund has committed more than $300 million to PIPE deals over the last three months, leveraging the same expertise and networks that are prevalent on the PE side.