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Laxman Pai, Opalesque Asia:

Greater China's staggering $600bn in Private equity and venture capital (PE & VC) assets under management (AUM), up 36% from the previous year, suggests an industry transitioning impressively. Yet, this latest rate of year-on-year growth is the slowest since 2014.

According to a Preqin report on the Greater China PEVC, the comparatively laggard pace parallels China's economic performance - its 6.2% GDP expansion in Q2 2019 was the most sluggish in 27 years.

Fundraising and closing deals are getting harder in the face of looming headwinds such as an economic slowdown, high debt and nagging trade tensions with the US.

The number of Greater China-focused PEVC funds closed and VC deals completed in 2019 up to the end of July plummeted 59% and 48% respectively compared with the same period last year.

After two decades of rapid economic growth fuelled by debt and foreign direct investments, the central government is spearheading a switch from an export-driven economy to domestic consumption. Traditional manufacturing is making a way for innovation and technology. In tandem with this transition, we see that the sources of capital driving the PEVC industry in Greater China are changing.

RMB-denominated vehicles dominates fundraising

The decade since 2008 marked the turning point. Fundraising became dominated by RMB-denominated vehicles backed by domestic players such as banks, local governments, and corporate investors......................

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