Trustar CEO Zhang says multinationals want to reduce China exposure but not exit

HONG KONG : Chinese private equity firm Trustar Capital’s Chairman and CEO Yichen Zhang said on Wednesday that a lot of multinationals want to reduce their exposure to China but do not want to leave completely.

Speaking at the Global Financial Leaders Investment Summit in Hong Kong, Zhang also said the property sector crisis was weighing on China’s economy “first and foremost” but that the country’s basic consumption was still “by and large intact”.

Zhang’s remarks came as China’s faltering economic recovery and rising trade and geopolitical tensions with the West have reduced interest in investing in the world’s second largest economy.

The total amount of China-focused private equity funds raised this year was just a fraction of that in 2022, Preqin data had shown.

A string of multinational firms have divested their China businesses or pared holdings in the last few years as some found it hard to reap desired profits amid slower growth, strong local competition or geopolitical headwinds, according to bankers.

Zhang said 2024 is still going to be a tough year in China.

“Transformation at a micro level is happening,” he said. “(but) 2024 is probably a year of recovery still and the overall fundraising environment is still tough for China.”

Trustar, formerly known as CITIC Capital, is currently raising a new private equity fund, people familiar with the situation have said.

It has $8.6 billion committed capital under management, its website says.

The firm is also in the process of raising a so-called continuation fund that would allow it and its fund investors to sell down their stakes in McDonald’s China, which the firm owns jointly with CITIC Ltd and Carlyle Group, Reuters has reported.

Zhang said McDonald’s China has seen over 20 per cent growth in 2023 and that the business has close to 6,000 stores in the country in one of the “many positive signs” from data on the ground.