General Atlantic, the US private equity firm known for big bets on ByteDance and fast-fashion retailer Shein, said China remains a top investment destination even as the clash between Beijing and Washington prompts other western groups to pull back.
Gabriel Caillaux, the firm’s co-president, told a SuperReturn conference panel in Berlin this week that China is “the most attractive” place to put money, particularly for faster-growing companies, and that it is seeking new targets.
General Atlantic’s public enthusiasm for China comes the same week that Sequoia Capital, one of its closest competitors, said it would split its US and China operations as tensions between the world’s two largest economies show little sign of easing.
By June last year, General Atlantic had invested $6.7bn in China, which the firm first entered in 2000. The private equity group, which has more than 34 portfolio companies in China and offices in Beijing, Hong Kong and Shanghai, has a seat on the board of TikTok’s parent ByteDance.
“We still think China offers great opportunity,” Caillaux added in a Bloomberg TV interview. “Our investors still want China exposure and we still think there’s a great moneymaking opportunity there.”
After more than a decade in which China provided compelling investments, western firms are now having to navigate the deteriorating relations with the US.
While General Atlantic has been in China for more than 20 years, he said that conditions have changed with investors now needing awareness of “certain sectors where the geopolitical risk is just too great” such as the semiconductor industry.
Last October, Washington introduced expansive chip export controls and the Netherlands and Japan have since followed. The Biden administration is considering an investment-screening mechanism that would stop US capital flowing into Chinese companies in sensitive sectors such as semiconductors and artificial intelligence.
The question of how to approach investing in China was a central talking point at the SuperReturn conference, an annual gathering of private equity executives.
Other big investors were less sanguine. Greg Mondre, the co-chief executive of Silver Lake, one of the world’s biggest tech investors, said there was a lack of clarity over which firms investors could back in China.
‘‘The US-China dynamic makes things quite interesting. Are there companies we can’t invest in?”
With relations between Washington and Beijing tense, JPMorgan last month held its Global China Summit in mainland China for the first time in years in what was seen as an attempt by the US business leaders who attended to press ahead with their owns plans in the country.
At the PE conference in Berlin, Robert Smith, founder of Vista Equity Partners, called on business leaders to help resolve the tensions.
“We have geopolitical tensions that are far more escalated than they need to be and I think that it is incumbent upon business people in my view to also provide leadership in bringing those tensions down,” Smith said.
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