BEIJING (Reuters) – A private equity unit of General Electric (GE.N) said on Thursday that it would focus on its existing investment portfolio in China rather than investing in new projects over the next 2-3 years amid poor market conditions.
Zhu Wenqian, head of private equity and business development, Greater China at GE Commercial Finance, said asset managers and investors would have to prepare for “a sustained war” before the markets start to recover.
“Over the next two to three years, I can’t see good opportunities (for companies) to go listing, so the most important thing to do at present is cash management,” she said during a panel discussion at an industry forum.
GE Commercial Finance, with assets of over $335 billion globally, is a unit of GE Capital, the flagship investment arm of General Electric. In China, GE Capital invests in companies directly and it is also a limited partner of CITIC Capital, an investment arm of China’s top financial conglomerate CITIC Group.
In terms of deals, GE focuses on buyouts and controlling stakes in China, Zhu said, adding that CITIC Capital was the only local buyout fund that GE had so far invested in.
Private capital including private equity, venture capital and buyout funds are strictly regulated in China, due especially to tight foreign exchange controls and the approval process for deals in which foreign funds seek control.
Zhu said it was difficult to find the right opportunities to invest in control deals due to China’s unique investment environment and uncertainties over some investment rules.
In July, U.S. buyout giant Carlyle Group abandoned plans to buy a significant stake in top construction equipment maker Xugong Group Construction Machinery Co after an initial deal had been struck nearly three years earlier.
“The chance for us to invest in more buyout funds in China will be very slim in the near term,” she said.
By George Chen