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Han Kun Releases 2021 Fund Practice Data Analysis Report

PE fund market rebounded.  Smart hardware and biomedicine retained the crown.

Han Kun Law Offices released the Han Kun 2021 Fund Practice Data Analysis Report (the “Report”).  The online version of the Report is available on the firm’s website at:

https://www.hankunlaw.com/upload/portal/20221201/a0ea1f8496964787497dd149ebce2d8d.pdf

In 2021, markets appeared to reach a new equilibrium following the widespread rampage wrought by Covid-19 the year before, as many economies gradually adjusted to the “new normal” and business activities saw a sharp rebound.  This was particularly true in the asset management industry which in 2021 experienced robust growth and vigorous capital flows.  In China, funds sponsored by government-owned entities enhanced their presence in the private equity sector while financial institutions added heft to the asset management industry.  At the same time, industry investors, including listed companies and local leading enterprises, allocated a bigger share of their capital to the primary market.  As a result, the private equity investment industry as a whole reported healthy growth compared to the year before.

Against this background, Han Kun was counsel to over a hundred private equity fund-raising projects in 2021, thanks to the trust of our clients and our strong position in this practice area.  It also underscored the buoyancy and resilience of the private equity investment industry.

This Report compares and analyzes data collected from private equity fund projects Han Kun advised on in 2021 and certain prior years.  It offers a different perspective that helps profile the private equity fund industry in 2021.  The Report highlights trends and changes in the industry by exploring certain legal terms frequently used in fund transactions.  It is our hope that the information imparted in the Report will be useful to our clients, friends, investors, and practitioners interested in the private equity fund market in China.

The Report makes horizontal and vertical comparisons of the private equity fund industry and the highlights in 2021 are as follows:

  • Investment destination: Smart hardware and biomedicine retained their crown in attracting private equity investment.
  • Fund terms: Funds tended to “live” longer accompanied by a gradual stretch of investment periods.
  • Fund structures: Simple fund structures continued to be favored by investors although special or complex structures, such as the parallel fund structure and feeder-master fund structure, gained traction with the investment community.
  • Management fees: No significant change to the primary management fee base and rates, though the frequency of fee payments increased.
  • Distribution mechanisms: The partner-by-partner allocation method had been widely accepted by the market. Investors preferred the by-fund distributions over by-deal distributions.  The majority of private equity funds provided for preferred returns.
  • Han Kun has long been active in the forefront of the onshore and offshore private equity fund industry.  Since 2016, the firm has been writing and publishing Comments on Hot Issues in Supervision and Practice of Private Equity Funds in China.  The firm hopes that this Report, like its predecessors, will contribute to a better understanding and development of the private equity fund industry.

    Please click the following link to find the Chinese version of the Report:

    https://www.hankunlaw.com/upload/portal/20221201/5fbd931a5cc72a153837196520272cbb.pdf

    About Us

    Han Kun is a leading full-service law firm in China.  Over the years, Han Kun has been widely recognized as a leader in complex cross-border and domestic transactions.  Our main practice areas include private equity, mergers and acquisitions, international and domestic capital markets, investment funds/asset management, competition/antitrust, banking and finance, aviation finance, foreign direct investment, corporate compliance, private client wealth management, intellectual property, data compliance, and dispute resolution.

    For further details, please visit our official website at:

    www.hankunlaw.com/en/

    Our official WeChat account: 汉坤律师事务所 (WeChat ID: hankunlaw)