NYPPEX Issues Warning About Investment Risk In China Private Equity
Secondary Private Equity Market Commentary
by Laurence G. Allen
NYPPEX, one of the world’s leading providers of secondary private equity liquidity, today issued a warning about investment risk in China private equity investments. NYPPEX believes that China is entering a new phase of government policies that, in summary, seek to focus on “common prosperity” and Mao Zedong’s vision for transitory capitalism. Mao Zedong believed that capitalism was initially only needed to alleviate widespread poverty in China.
It was reported by Reuters that Chinese government officials recently told large property developers in Hong Kong to prepare for higher taxes to help solve the city’s housing shortage, as Beijing planned to target the city’s wealth gap and runaway housing prices. As a result, shares in Li Ka-shing’s CK Asset fell approximately 9.3% and Henderson Land lost 13.2% on the next business day.
Further, Blackstone recently cancelled its pending $3 billion acquisition of Soho China, a large property developer, despite having received an approximate 60% discount to Soho’s book value as of the end of 2020.
NYPPEX estimates that China’s policy changes in 2021 have caused a decline of more than $1 trillion in stock market value in publicly-traded Chinese companies.
NYPPEX believes that a default by China Evergrande Group, a large Chinese real estate developer with over $125 billion in debt, could have an adverse effect on China related funds worldwide. Some China Evergrande bonds are reported to have traded at approximately 25% of face value in September 2021.
NYPPEX believes that a default by China Evergrande Group, a large Chinese real estate developer with over $125 billion in debt, could have an adverse effect on China related funds worldwide. Some China Evergrande bonds are reported to have traded at approximately 25% of face value in September 2021.
NYPPEX believes the recent declines in Chinese stocks may cause greater risk for private investments in Chinese private companies and private equity funds.
NYPPEX believes this is an opportune time for investors and funds to evaluate their exposure and portfolio allocations to investments in China private equity.
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About NYPPEX Holdings
NYPPEX Holdings operates a global private marketplace that provides price data and the opportunity for qualified investors to access secondary liquidity in alternative investment funds in a fair and ethical manner. Its clients include alternative investment funds, financial institutions, endowments, foundations, institutional investors, family offices, private clients and their respective advisors worldwide.
Since 2004, the NYPPEX QMS™ has been formerly recognized by the U.S. Internal Revenue Service as a Qualified Matching Service for private partnerships though a private letter ruling under Internal Revenue Code §1.7704.
In 2014, the NYPPEX (Shanghai) Investment Consulting Co. Ltd. was among the first foreign financial firms approved as members into the Shanghai Free Trade Zone (FTZ), along with Oaktree Capital, Citadel and Man Group. Among its features, the Shanghai FTZ permits yuan convertibility and unrestricted foreign currency exchange, and a tax-free period of 10 years for the businesses in the area.
Its private securities are privately offered to qualified investors through NYPPEX, LLC and only in jurisdictions were permitted. NYPPEX is regulated in the U.S. by the SEC and FINRA. Member FINRA, SPIC.
For more information, please visit www.nyppex.com or contact inquiries@nyppex.com or by phone at +1 (914) 305-2825.
Risk Disclosure: The information contained herein is market commentary by NYPPEX. NYPPEX provides its market commentary for informational purposes only. This market commentary is incomplete, relies on information from 3rd parties and such information may be incorrect or change at any time without notice or update to the market commentary.
Private placements are illiquid, speculative and investors may lose their entire investment.
This commentary is for informational purposes only and only for the addressee specified, which we understand to be a Qualified Purchaser and holder of private equity fund assets. It does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security which may only be done through an issuer’s offering documents and in jurisdictions where permissible. Nothing contained in this email or subsequent document constitutes investment advice or offers any opinion with respect to the suitability of any security. The views expressed on this email and subsequent documents should not be taken as advice to buy, sell or hold any security. In preparing the information contained in this invitation, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors. Any views expressed on this invitation or subsequent report by NYPPEX were prepared based upon the information available to NYPPEX at the time such views were written. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.