Private equity firms plan cuts in China to escape property woes

[LONDON] Private equity investors are cooling on China, pulling back from real estate amid mounting troubles at some of the nation's biggest developers and with many also planning to cut bets on startups.

Among international investors, a third will reduce their exposure to Chinese real estate funds over the next 3 years with none planning an increase, according to a survey by alternative asset manager Coller Capital.

When including buyouts, venture, infrastructure and private credit, there was an even split between increasing or cutting investments in China, Coller said after surveying more than 100 investors.

Major developers such as China Evergrande Group are struggling to stay afloat after a multi-year push by Beijing to reduce leverage and cool the nation's frothy property market.

Adding to the chill for investors has been a broad campaign in China to rein in private businesses, including the nation's big technology firms and private education companies.

China private market fundraising has slumped more than 60 per cent year-to-date from 2020, according to data compiled by Preqin. The survey found that about a third of the investors plan to increase their allocations to Asia Pacific outside of China. The biggest increases will be in buyout, infrastructure and venture capital, the report said.

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