Adam Roseman, CEO of ARC Investment Partners, a Beverly Hills-based private equity firm.
In: ARC China
4 Jul 2011ARC 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.”
In an article by Aston Tan entitled, “Looking Off the Beaten Track,” he discusses the investment opportunities available in more remote areas. Adam Roseman, CEO and Founder of ARC China, explains that there are often stumbling blocks in the process of doing business in these areas.
He explains that, while many entrepreneurs want a public market listing for their company, “They are never initially fully receptive; it’s a long period of relationship development.” Adam Roseman goes on to explain that, “It requires a very lengthy educational process with the entrepreneur – which is critical to go through so that they actually understand the impact of taking a private equity investor. We spend a lot of time working to demonstrate that we have taken the time to understand their business, [and to] demonstrate to them the areas of value that we’re going to be able to add.”
When asked more about investing in some of China’s out-of-the-way areas, Adam Roseman of ARC China said, “It’s bigger than anyone understands if they are not dealing in these regions.”
In recent news for ARC China, they have appointed Dan Loeb, the Founder and CEO of Catavate Group, as Senior Operating Advisor for the firm’s ARC Westly China Fund. As part of his job, he will assist with due diligence on companies that may become investees and will also provide ongoing strategic and operational advice to the fund’s portfolio companies.
Adam Roseman, ARC China’s Founder and Managing Director said, “Dan is a leader in building strong retail platforms in China. He has been on the ground in China for more than 16 years building brands and his experience will be extremely valuable in our efforts to build a world-class infrastructure for investment in the Chinese market.”
Mr. Loeb also explained how pleased he is with the new position. As he stated, “I am pleased and excited to be joining the ARC China team. They have built an impressive investment platform in China and have a strong track record investing in China’s retail space. I hope to build upon that success by leveraging Catavate’s collective experience with consumer brands and retail businesses in China.”
Certainly, Adam Roseman, ARC China and the entire team look forward to this new addition.
China Gets Big Cash Injection
When it comes to big cash injections vis-à-vis Chinese investments, Adam Roseman, CEO of ARC China, probably knows a thing or two. Having “facilitated investment of over $150 million” into various projects in the region, Adam Roseman of ARC Investment Partners has quite a lot of experience behind him. Today, 360buy.com – the country’s largest online retailer – is getting “hundreds of millions of dollars” from a group of investors including DST (venture capital fund in Russia which supported Facebook) and – in the past – Walmart.
Increased Chinese Commerce
It looks like 360buy.com will be getting a stock market listing in the near future too. There is strong hope of a substantial development for Chinese online commerce which 360buy.com can capitalize on. Initially it was little more than an online electronics store but today sells a whole slew of products and services including a group-buy channel, not that dissimilar to Groupon.
DST is definitely not short of a dime or two, run by Russian billionaires Yuri Milner and Alisher Usmanov. For someone like Chinese investor Adam Roseman, this news is very good.
Earlier this year, CEO and founder of ARC China Adam Roseman organized a trip to China for over twenty European investors. His goal was to give them insight into the country’s economy and businesses, as well as to present them with new opportunities.
Roseman explained that China is likely to become a key player in world economics. “I am confident that China will emerge from the current economic downturn in the best position of the world’s largest economies and will be the largest beneficiary of what is likely to be history’s biggest redistribution of wealth. The country’s massive cash reserves, strong education system, work ethic and efficient government with a primary focus of ensuring economic growth with create tremendous opportunity for investors with a strong foothold and local presence,” he said. His company ARC China has established such a foothold through various private and public sector relationships.
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