Anla Cheng: China’s IPO Market Might Open Sooner Than You Expect

In this episode of China Money Network, guest Anla Cheng, partner at Sino-Century China Private Equity Partners, talks with our host Nina Xiang, about the importance of protecting intellectual property for companies in China's financial information sector, why she thinks China's IPO market might open sooner than expected, and her hopes for the realization of substantive reforms in China. Read an excerpt below, but be sure to listen to the full interview in audio or watch an abbreviated video version. Don't forget to subscribe to the podcast in the iTunes store. Q: Can you give us a brief introduction of Sino-Century China Private Equity Partners? A: Sino-Century was founded in 2005 by three partners. Our founder, Dr. Hong Chang, used to work at the municipality in Pudong, Shanghai. He was one of the 25 financial architects who built the Pudong district. Therefore, he's very close to the build-up of China's financial center. We launched our first RMB fund in 2007 focused on small and medium enterprises (SME). We focus on three sectors: financial information and services, which is the mainstay of our fund. About 50% of our assets are invested in this area. The other two are high-end manufacturing and sustainable environment. Q: Do you currently only manage one fund? A: We are onto our second fund. Our first fund initially planned to raise $150 million. Then the financial crisis hit and we closed at $73 million. It is mainly in RMB, but also has about 15% of assets in U.S. dollars. We had several exits already and were hoping for another exit last year. Then the IPO market got closed. But we are on the "queue," of which there are about 800 companies waiting to go public in China. There are about 40 to 80 companies that already received approval to list, one of which is a company we invested. We are in the final stage of marketing our second fund, which we are targeting $250 million. It's going to be predominately in U.S. dollars because our founder has always a vision to become an international fund. Q: There are media reports saying that Sino-Century invested RMB84 million in Wind Info for a stake of 7% to 9% in 2007. Are they accurate? A: Yes. Initially, we invested about $12.7 million for a stake above 7%. Two years after we made the investment, CITIC PE bought a share at about three times of our valuation, and our share got diluted a bit. Q: Intellectual property is critical in this sector. Wind Info has sued competitors for IP infringement last year, and others have sued Wind Info for the same cause. Do you think lawsuits are effective in protecting IPs in China? A: Probably not as effective as in other places, but at least it's a beginning. Wind Info's pending lawsuit (against Zhejiang Hithink Flush Information Network Co.) is dragging on a bit but I believe Wind Info has a strong case. ....... Anla Cheng is partner at Sino-Century China Private Equity Partners. Before joining Sino-Century in 2007, she was the founder of Centenium Capital. Previously, she was senior vice-resident of Robert Fleming for Asian investment; institutional head of the Asia desk for Prudential Bache and portfolio manager at Citibank Asia Asset Management. She started her career at Goldman Sachs.