Adam Roseman of ARC Investment Partners discussed China’s IPO volume in a newsletter. The report states that IPOs on China’s capital market may hit $61.9 billion this year, which is a decrease of 16% from last year.

Jean Sun, a partner at PricewaterhouseCoopers China, said “Despite the decrease in China’s IPO market activity in the first six months this year, we believe the momentum remains robust for 2011, due to high confidence in the growth of China’s economy and domestic demand. Other factors, such as the large amount of capital and limited investment channels, will also help stimulate the market.”

PwC also predicted that China’s IPO market leaders will be the manufacturing industry, information technology, financial services and retail, consumer goods and services.

In an effort to further develop the cultural industry, China has set up its first state-level investment fund with this focus, according to Adam Roseman of ARC Investment Partners.

Aiming to raise 20 billion yuan, or $3.1 billion, the China Culture Industrial Investment Fund was launched by the Ministry of Finance and three other companies.

“The cultural industry still lacks vitality and companies find it hard to raise funding and invest in others; the fund is intended to ease these problems,” explained the Vice-Minister of Finance Li Yong.

The China Culture Industrial Investment Fund is one of many new investment funds in the field. Venture capital and private equity companies are also taking interest in the cultural sector.

“The market is full of potential but many cultural companies are not competitive enough to thrive. That’s why culture has to marry industry to make itself big,” Yu Feng of the Yunfeng Fund said.

Adam Roseman of ARC China recently discussed Prada’s initial public offering in Hong Kong in the company’s newsletter. He explained that Prada SpA hopes to raise as much as $2.6 billion in the offering.

According to Scilla Huang Sun, equity head at Swiss & Global Asset Management, on average, Chinese consumer companies “have a higher valuation that consumer companies elsewhere. But that’s also due probably to their higher growth potential. Also, all these Chinese companies have almost 100 percent exposure to the Chinese market, whereas luxury companies including Prada have only a partial exposure.”

According to an article written by Adam Roseman in ARC China’s newsletter, Starbucks Coffee Company has recently announced that it plans to acquire ownership of all its stores in China from Maxim’s Caterers Ltd.

Starbucks said the transaction would enable it to increase profitability in China, because it would give the company more direct control of the stores in Chongqing municipality as well as five other provinces.

The agreement states that Maxim’s will be given 100% control over Starbucks branches in Hong Kong and Macao.

According to the company, they intend to have 1,500 Starbucks-branded stores opened in China by 2015.

ARC China’s recent newsletter reported that Coca-Cola Co., the largest soft-drink producer in the world, announced that it is exploring a possible listing in Shanghai.

Coca Cola stated that it will invest $2 billion into China, as well as opened three new plants in Mongolia late last year.

“We are interested in exploring the opportunity of listing our stock on the Shanghai Stock Exchange,” explained Geoff Walsh of Asia Pacific Coca Cola. “Obviously, we need to better understand the regulatory framework and listing requirements. We continue to have positive discussions with Chinese government officials as we look at this opportunity.”

Coke is one of many companies currently looking into opportunities in China due to its rising economy. ARC China with Adam Roseman is an example of another such firm.

Growth and development in China over the past few years has been remarkable. As the coastal and eastern cities begin to fill up, numerous investment firms have begun to move inward towards the second, third and even fourth tier cities.

Lunar Capital, though currently based in Shanghai, has stated that one of its goals is ‘inward and inland growth.’

“We believe if you’re going to be successful in these regions, you can’t just rely on a team that’s sitting in Shanghai, you have to have extra resources, whether it’s in our Chengdu office or people who are based locally with our portfolio companies full time,” explained Derek Sulger, a founding partner of the company.

Adam Roseman and his firm ARC China have recently invested in a tier four city’s clothing retail outlets. He agrees with Sulger’s statement, and believes it is indeed important to be on site in order to manage business and to utilize the potential of these areas. ARC China invests in several second and third tier regions like Fujian, Liaoning and Szechuan.

Bloomberg recently reported that China’s inflation rate has accelerated to 5.5%. As Bloomberg reported, “Signs the world’s second-biggest economy is maintaining momentum after increases in borrowing costs and curbs on real estate may have encouraged policy makers to add to tightening measures. At the same time, weakness in the global economy and data yesterday showing slower bank lending and money-supply growth may make a decision on further raising interest rates a tougher call.”

Certainly, this is important information for companies that invest in China like ARC Investment Partners with Adam Roseman.

Read the complete article for more information.

As stated by ARC China, where Adam Roseman is the Founder and Managing Director, the ARC Westly China Fund focuses on investments in the consumption-oriented high-growth enterprises.  They focus on China’s Tier II and Tier III cities.

Their unique structure welcomes non-China LPs to be able to participate in RMB denominated investment with its offshore USD Fund.

The Westly Fund focuses on investing in Chinese domestic enterprises that are profitable and have great potential for growth and that are low in risk.  They say that they focus on industries that are consistent with NDRC’s 5-year plan of looking at domestic consumption, sustainability and healthcare.

As reported on the ARC China site, “ The fund seeks to achieve consistent value realization across the portfolio through multi options, exit driven strategy led by our extensive in-house due diligence team with a strong mix of local Chinese and international professionals.”

In his weekly newsletter, Adam Roseman of ARC China discussed the 3rd Nobel Laureate Symposium on Global Sustainability.  This symposium was recently held in Stockholm, Sweden with the goal of preparing a document that would be presented during the World Conference on the Environment.

At the symposium, Norwegian Prime Minister Gro Harlem Brundtland praised China on its green economy efforts.  Brundtland said, “I think the leadership in China knows that the pattern of development in China cannot be coal-based, oil-based, transport-based in private cars, so they talk about green economy, because they know they have different energy resources, they have to use solar and they are entering into changing all these technologies and implementing them.”

Roseman explained that, according to McKinsey & Company, which is a consultancy firm, China has the potential it needs to build a “green economy” in the coming decade.  To fulfill this goal, however, McKinsey estimated that China will need an investment of up to RMB 1.5 to 2 trillion each year from now until 2030 to implement their green technology plans.

Adam Roseman concludes by stating: “China is taking an aggressive stance to reduce its environmental impact and has all the credentials to serve in the future as a model for other countries wishing to follow a sustainable path of development. “

In his weekly newsletter for ARC China, Founder and Managing Partner Adam Roseman explains the many steps that China has taken to deal with potential inflation.  Two contributors to inflation include real estate prices and “hot money” inflow issues.

Roseman explained that China has taken many steps to control the real estate prices.  As he wrote, “Many large to middle sized cities in China now have implemented a limit on loans to non-local buyers and suspended loans for purchases of 3rd homes. For the first property to be purchased by a family, the government has mandated a minimum down payment of 30% of the purchase price if the property has a gross floor area of more than 90 square meters. Families that purchase a second property are required to make a down payment of 60% of the purchase price. For such properties, the interest rate to be charged on the loan must be 1.1 times the People’s Bank of China benchmark interest rate.”

When analyzing the hot-money inflows, Adam Roseman said that the Chinese government is having banks hold more foreign exchange and that they are strengthening their auditing of overseas fundraising.

In addition, as Roseman explained, “Apart from expected contributing factors of inflation, the Chinese Government has also proved its ability to act swiftly and successfully to bring vegetable prices down when there was a sharp increase in those prices in the winter of 2010. In addition, the Chinese Government recently announced limited price control guidelines and said it would put state reserves of grains, edible oils and sugar on the market when necessary in order to increase market supply.”

About this blog

Stay up to date on the economic news from China. Gain insight from leading investors in the Chinese market, like Adam Roseman of ARC Investment Partners. Follow the economic trends and changes occurring in the global marketplace, as they relate to changes taking place in China.

Photostream