Investment opportunities in China have evolved and shifted gradually to a more matured and globalized in nature after two decades of growth. The recent development of secondary equity markets and active participation of both international and domestic investors have also improved the liquidity and size of funds in the markets.
Many Chinese companies had successfully listed in foreign stock exchanges in the U.S, Hong Kong, UK and Singapore; and, some in Germany, Australia and Tokyo – over 1,400 by July 2013. Many are trading at multiples of its listed IPO prices.
The cross-border M&A market in the country also sees steady growth as IPO market matured.
China Knowledge Consulting (“CKC”) has, over a decade, assisted and participated in pre-IPO or early stage investment in many good quality companies with exponential growth potential and market leaders in certain industries.
Engaging our financial advisory and consulting provides a one-stop shop to many foreign investments that requires fast execution in the vast and complex country. We have the research capabilities, extensive business networks, and worked with many local authorities in the department of tax, audit and legal and others across many other ministries.
Case #1: On-the-ground research, feasibility studies and thorough private investigations
We were assigned by a U.K-based private equity to look into a retail chain in a city in Sichuan province. An offer to buy into this company came from a Hong Kong’s contact. The preliminary work was to conduct the business’s reputation and operation in its local market. We did a survey on some the business outlets to learn about the business, operation and product offers acting as customers and potential supplier. Also, we field questionnaire to its customers and general public about the company’s reputation and goodwill.
Though it passed the ‘litmus test’, some further studies were conducted to know in-depth about the founder and key managers of the business. We had detective style investigation to map out the relationships of these individuals, and ensure there were no legal tussles or misconducts recorded with the local legal departments.
The business which fetches high ROI justified a trip by the investors to meet the sellers.
We arranged the meeting and acted as translator and advisor on the sale of the business. After about several months a final price was agreed we despatched analysts to conduct due diligence in many aspects. Several external auditors and lawyers settled in China Knowledge’s office in Sichuan and Hong Kong where the seller’s maintained their core accounting and finance functions.
Weeks before inking the deal CKC arranged several meetings with local authority to ensure such foreign acquisition of local retail chain is welcome and not faced legal challenges from government departments. A trip from the government side, on invitation of our client to exchange and sharing business insights or possible cross border M&A to London, was arranged.
Upon signing the deal which took place in CKC’s office in Sichuan where we offer the translation and interpretation of the negotiation and contract a team of several key management introduced by us was put in place.
As of July 2013, the profit-making business is seeking a trade sale though it had dropped it listing plan in the exchange due to unfavourable PE ratio.
Besides the bigger and main roles mentioned above there were many other administrative, HR and legal matters took care by CKC to smoothen the acquisition, and in the latter years of business.
The deal offers several times multiple of its initial investment.
Case #2: Roadshow for a Malaysian investment bank seeking potential IPO candidates in Chengdu
Investment banks in Malaysia, like its neighbouring country Singapore that has been successful in listing Chinese companies in the SGX, are keen to boost its international stand and market size made their inroads into China. CKC participated by pitching to the top 5 investment banks and the Malaysian bourse, BURSA, to introduce the local exchange to Chinese companies.
One local major Chinese-owned investment bank (client) gave the mandate to CKC to research the top retailers and pharmaceutical companies in Sichuan province. Our research and feasibility studies were followed by an extensive marketing to meet potential companies.
The trips have offered the client an insight of the vast potential in other areas of corporate finance works but also M&A, banking and other financial services.
Case #3: A Swiss boutique fund seeking investments from Chinese state-owned & operated funds and institutional investors
Due to weak market and tightening liquidity in the Swiss and European markets, CKC was mandated to find institutional and sovereign funds wanting to invest in a hedge fund (our client) based in Zurich.
A string of high level meetings were arranged to present our client’s track records and credentials. CKC sent in our CFA-qualified marketing staffs to Hong Kong, Shenzhen, Shanghai and Beijing to accompany the client in every meeting we arranged. Our marketing network and knowledge about the industry based on our 12 years of research and experience allowed our client to have quick and effective access to top decision makers.
The success of two consecutive trips across the country got our client quick entry that has no contact or knowledge in China.
See our past works in fund management and brokerage industry
Case #4: Pioneer research and rating on China’s industrial parks that creates industrial REIT for foreign real estate funds
CKC is the only research and rating company on China’s industrial parks since 2001. These industrial parks are engines of China’s economic miracles that churned out 80% of China’s industrial outputs. Many of these industrial parks have a GDP production capacity of over USD 100 billion each. Land areas are usually larger than 400 km sq.
Foreign real estate funds are seeking this new growth market by tapping on CKC’s extensive research and deep relationships with the developers – usually the local government.
This has led to the concept coined by CKC known as ‘park within a park’ where special or unique theme industrial parks are built to cater to different industry or industry clusters.
We have been very successful in assisting foreign investors and funds in land acquisition and development of industry theme parks.
Our Investment & Financial Advisory includes but not restricted to the followings:
- Deal matching & introduction
- Act as consultant for fundraising in the primary and secondary markets in China
- Cross-border M&A (Chinese companies’ M&A conducted overseas)
- Mergers & acquisition advisory (within China)
- Financial & tax due diligence
- Consultant for setting up of VC, investment fund and private equity
- Land Acquisition (in China)
You can consult us in many areas of investment in China at email@example.com