China-focused private equity investment trust eyes London IPO
5th September 2022 12:12
by Kyle Caldwell from interactive investor
Share on
If the IPO is successful it will be the first investment trust to list on the London Stock Exchange this year.
The first investment company dedicated to investing in Chinese private equity is gearing up for an IPO.
Welkin China Private Equity Limited announced this morning it is aiming to raise $300 million (£261 million). It is targeting yearly net asset value (NAV) total returns of at least 15% over the long term.
The proposed IPO comes at a good time – argues Welkin – in order to take advantage of “the valuation reset in Chinese companies” following the sell-off in the country’s listed equity market this year, which by extension has caused valuations for unlisted firms to fall.
Some investors have moved away from China on the grounds of political risk outweighing the potential rewards, in response to government crackdowns last year into its technology and education sectors. Moreover, geopolitical tensions between the West and China has also dampened investor sentiment.
Welkin was founded in 2009 by members of well-connected families that have founded or co-founded, built and/or operated leading businesses in China since the beginning of the 20th century. It manages around $500 million for global institutional investors including sovereigns and pension schemes.
Ivan Chu, chair of Welkin China Private Equity Limited, commented:"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."
- Investors turn to investment trusts with inflation protection
- Why these defensive investments will continue to deliver
- Funds Fan: why fund size matters, and Fundsmith challenger interview
New stock market listings have been in short supply so far in 2022 due to the volatile market backdrop.
If the IPO is successful it will be the first investment trust to list on the London Stock Exchange this year. In contrast, 2021 was a bumper period with 16 IPOs.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.