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People's Daily Online>>China Business

Investors netted by appeal of new Internet companies (2)

By Shen Jingting (China Daily)

11:07, March 23, 2012

"Venture capital and private equity's total investment amount in China surpassed 250 billion yuan ($39.7 billion), and the Internet sector ranked in the top three industries that drew the most money," said Gavin Ni, chairman and chief executive officer of Zero2IPO.

Yet since the second half of last year, valuations of new Internet companies have decreased. "Some have been reduced by half", as a result of global economic uncertainties and credit concerns about Chinese companies listed in the United States, Ni said.

Meanwhile, initial public offerings remain the main way that venture capital and private equity investors exit companies they have invested in.

The fact that fewer companies filed those offerings in 2011 has placed investors under pressure and caused some to be reluctant to make new investments, said Liu Erhai, managing director of Legend Capital.

In 2011, there were 613 initial public offerings around the world, of which 58.1 percent were related to Chinese companies. The same year saw 356 Chinese companies file IPOs and raise $61.5 billion on stock exchanges.

Both figures dropped greatly compared with what they had been the previous year.

"Investors should be patient and far-sighted, because the Internet market, especially the e-commerce business, is full of potential in China," Liu added.

Deutsche Bank AG expects China's e-commerce market to handle transactions worth more than 1.5 trillion yuan by 2014 and have a compound annual growth rate of 42 percent.

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