Bain, based in Boston, counts about $160bn in assets under management in areas including private and public equity, fixed income, credit, venture capital and real estate, its website shows.
Zhu expects China’s economy will likely expand at a “significantly higher” rate this year, citing positives from Beijing’s support for the embattled property sector, eased restrictions on the Internet platform companies as well as the end of Covid lockdowns.
The nation’s stocks have staged a “meaningful” recovery, he said, with the benchmark CSI 300 Index rebounding by as much as 20% from late October.
Inflation will not be as big an issue for China after its reopening since its economy isn’t synchronous with the rest of the world, he said.
The company has invested about 40%-50% of its first two Asia funds in China, as well as a smaller percentage from its larger third and fourth funds, Zhu said. The three deals that Bain did in China last year amounted to more than $1bn combined, he said.
Bain currently has more than two dozen people on its China team and is looking to hire three to four more this year.
Zhu said he sees investment opportunities in renewable energy, health care, consumption and industrial sectors, preferably firms with scale with the ability to generate cash flow and a management team that Bain can work with to improve the business.
ChatGPT and its equivalent AIs, however, may not necessarily be an investable theme for PE firms despite being a potential “game changer,” he said. That area is in a relatively early stage of development and requires large amounts of capital for a potential investment, he said.
“The technology risk is very big,” said Zhu. “You’re probably more likely going to see PE firms focusing on maybe providing picks and shovels to the gold diggers.”
Still, Chindata Group Holdings Ltd., a Bain portfolio company that runs data centers, may stand to benefit from the frenzy around ChatGPT as it will lead to exponential growth in demand for computing power and data center services, according to Zhu.
The firm has attracted takeover interest from multiple industry rivals including Shanghai-based GDS Holdings Ltd., Bloomberg News reported last year. State-owned China Merchants Group Ltd. was also said to be exploring a takeover offer in November.
Bain is in no rush to exit its investment, according to Zhu. The firm bought Chindata in 2019 and merged it with its portfolio firm Bridge Data Centers. In 2020, Chindata raised $621 million through its US initial public offering.
“It’s great that actually you invest in the company that does well and other people are interested,” said Zhu. “But then at the same time, because the company is doing so well, we feel we have all the options that we need. So we’re not in a hurry to do anything.”
Source: BNN Bloomberg