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Welkin China Private Equity targets $300m IPO

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Welkin China Private Equity targets $300m IPO – Welkin China Private Equity (WCPE), a newly established closed-ended investment company dedicated to investing in unquoted Chinese companies, has announced its intention to float, targeting a raise of up to $300m. It expects to publish its prospectus in the coming days.

The company will offer public investors exposure to a broadly diversified portfolio of Chinese private equity investments across sector, stage, maturity, and manager, through a two-pronged investment strategy designed to capture both market dislocation and long-term growth opportunities. WCPE will be targeting an annualised NAV total return of at least 15% over the long-term.

The manager, Welkin Capital Management, is led by an experienced team with deep knowledge of the Chinese private equity market and a proven track record, delivering a compounded annualised return of 28% for all investments in Chinese investee companies made across all Welkin Funds up until 31 December 2021.

WCPE will leverage Welkin’s deep local networks, institutional platform, and extensive industry relationships to construct a diversified portfolio of privately negotiated investments in unquoted Chinese companies. Welkin will focus on the following investment strategies:

Growth Investments: Investments in growing Chinese companies that need to raise capital for expansion, and which the manager expects will generate long term capital growth. These investments will primarily be made through funds managed by Welkin and adjacent co-investments.

Tactical Investments: Investments in individual companies, portfolios of assets, externally managed funds and co-investments, which the manager expects will have a relatively shorter duration to realisation. For the period of 12 to 18 months from admission, the company will focus primarily on secondary opportunities in externally managed private equity funds.

The company highlighted strategic diversification, favourable market timing and a robust pipeline among other reasons to support its launch.

Strategic diversification: WCPE will invest in a broadly diversified portfolio of unquoted Chinese companies across different sectors and investment horizons by taking a flexible and strategic approach to dynamically capture both long-term growth opportunities and market dislocations.

Favourable market timing to achieve outsized returns: There has been a valuation reset in Chinese companies. Welkin believes the growing market dislocations present attractive investment opportunities for investors who know and understand China’s private equity market and who can effectively perform due diligence on opportunities.

Proprietary deal flow: Welkin has strong access to local industry relationships built on the enduring legacies of well-connected families in China. These extensive networks help Welkin generate proprietary deals from trusted referrals and directly access entrepreneurs and asset owners.

Robust pipeline of attractive opportunities: Due to significant deal flow generated by Welkin’s proprietary network, the company has a large and well-advanced pipeline of potential opportunities of up to $500m across both growth and tactical Investments.

A seeded portfolio with clear growth prospects: The seed assets provide exposure to a diverse portfolio of 10 underlying Chinese companies with a track record of delivering growth.

Liquidity and transparency: Investors will be able to access unquoted Chinese companies with long-term growth potential, an investment class that has been difficult to access for individual investors, but with the benefit of high governance standards, public transparency, and the daily liquidity of the London Stock Exchange.

Ivan Chu, chair of WCPE, said: “Welkin China Private Equity will be the first investment company focused on Chinese private equity to be listed on the London Stock Exchange. This gives public investors diversified access to private market investments in China, through funds managed by Welkin and selected external managers. The Welkin team has deep local market expertise, a strong track-record, on-the-ground presence, and a good understanding of the Chinese business and policy environment. We are excited to offer investors exposure to an asset class which we believe will provide attractive returns with the added benefit of market-driven liquidity and a high level of transparency.”

Johnny Kong, CEO and co-founder of Welkin, added: “We believe China’s economy is undergoing a structural shift over the next decade, moving away from volume-fuelled expansion to productivity-led growth. Changes in government policies over the past year reflect this shift. While there has been a period of immense volatility in the public markets, secular growth drivers continue to provide support for long-term investment in the next stage of China’s economic transformation. We see valuations of private equity assets in China reaching attractive levels. At the same time, domestic equity capital markets and M&A activity are strong, so the current environment is opportune for dealmaking. We believe China¡¯s private market can provide a vital element of diversification to any investment portfolio, and we are looking forward with confidence to creating value for shareholders.”

WCPE : Welkin China Private Equity targets $300m IPO

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