Ask me anything: Ex Banking Analyst in China + Incoming PE Analyst

Hi All, been on the site for a while and previously contributed a bit on investment banking in China. After 2 years at my previous bank, I am moving to a top middle market Asia focused PE fund (China team) in the next few weeks. I have experience working on cross-border M&A, both onshore and offshore reorganizations and IPOs, international board listings in Shanghai, etc.

I can speak about those topics freely if anyone is interested.

As for interview experience, I've interviewed for lateral positions at bulge brackets in HK, local and USD PE funds in China, as well as funds with a pan-asia focus. I do not have experience interviewing with int'l mega funds in China.

A couple of thoughts on my recent interview experiences:

For lateral positions at HK BBs, they care a lot about your experience working with HK IPOs so they'll ask you very detailed transaction related questions with regards to the overall execution. Topics like timetable consideration, valuation between different exchanges, and HKEx listing rules came up all the time.

For my PE interviews, nearly all my interviewers asked me to pitch them an industry and investment idea I liked. They like to see ample homework has been done as to the rough size of the industry, growth prospects, industry trends, valuation, etc. Essentially the interviewers just want to get a sense for your "investment gut feeling". Deal experience was also a big topic but questions in this area deviate largely on the PE funds investment strategy. For example, local PE funds like Citic PE, Hony Capital who do more RMB investments within China and do a lot of restructuring would try to test your knowledge of Chinese Company and Securities law. International firms, especially when the interviewer worked primarily abroad rarely ask legal related questions and tend to focus more on the operational and financial side of investments.

Comments (20)

 
Aug 13, 2013 - 11:45pm

Mandarin is a MUST. If you are unable to read or write, i STRONGLY advise against working in China. 10 years ago you could get away with it in Hong Kong since deals were mostly overseas IPOs (even for HK listings, all documentation is primarily done in English) but this is no longer the case. I would evaluate where your Chinese level stands and whether a intensive Chinese class at PKU/Tsinghua will be able to help significantly. You definitely need to read and write near perfectly.

 
Oct 16, 2013 - 11:33pm

lulzbanker:

Mandarin is a MUST. If you are unable to read or write, i STRONGLY advise against working in China. 10 years ago you could get away with it in Hong Kong since deals were mostly overseas IPOs (even for HK listings, all documentation is primarily done in English) but this is no longer the case. I would evaluate where your Chinese level stands and whether a intensive Chinese class at PKU/Tsinghua will be able to help significantly. You definitely need to read and write near perfectly.

As a non-Mandarin speaking and non-Chinese writing person working in HK that spends lots of time in China looking at targets, this is very true and unfortunately an intensive Chinese class at PKU/Tsinghua isn't going to bring most people up to speed - the level of Chinese you need is something very difficult for non-native speakers, especially if you aren't already familiar with the culture.

- V
 
Aug 13, 2013 - 11:42pm

In both your M&A and PE positions, are you focused entirely on China/HK/Taiwan deals? Or are other Far East or South East countries included? What's the breakdown?

 
Aug 13, 2013 - 11:47pm

Everything I worked on in my IBD role was China related. I worked on cross-border deals between China and HK, China and North America, and China and South America. With regards to my new PE role, i envision it will mostly be China and HK (I will be part of the China team).

 
Aug 14, 2013 - 2:39am

lulzbanker:

Mandarin is a MUST. If you are unable to read or write, i STRONGLY advise against working in China. 10 years ago you could get away with it in Hong Kong since deals were mostly overseas IPOs (even for HK listings, all documentation is primarily done in English) but this is no longer the case. I would evaluate where your Chinese level stands and whether a intensive Chinese class at PKU/Tsinghua will be able to help significantly. You definitely need to read and write near perfectly.

Is there a good intensive Chinese program in Shanghai?

 
Most Helpful
Aug 17, 2018 - 3:39am

there are many. Fudan's is quite good.
Won't get you good enough to work in Chinese PE though.
Not be a long-shot.

For 2 reasons.
1) it's not just language it's culture. If you want to succeed in China PE, you need to be able to convince local company mgmt to sell the company equity to you. Would they rather sell to a non-Chinese or a Chinese from their province/home-town? Exactly.
Want to succeed at the firm? How Chinese are you? If not super local, forgetaboutit.

2) how many years do you think you'll need to study Chinese to be competitive against a local hire, in reading and writing? I'd say about 10 years of study full time. To get to true native level that can make the hiring manager say, "I'll hire you not the cheaper local guy." Worth it? I think not.

 
Aug 14, 2013 - 4:33am

lulzbanker:

Mandarin is a MUST. If you are unable to read or write, i STRONGLY advise against working in China. 10 years ago you could get away with it in Hong Kong since deals were mostly overseas IPOs (even for HK listings, all documentation is primarily done in English) but this is no longer the case. I would evaluate where your Chinese level stands and whether a intensive Chinese class at PKU/Tsinghua will be able to help significantly. You definitely need to read and write near perfectly.

Do you do a lot of China/SE Asia or even China/Korea deals? In regards to reading and writing at the near-native level, is there a HSK level or PKU/Tsinghua classes determine it?

 
Aug 15, 2013 - 11:22pm

I have no clue. Imagine doing everything on a normal IBD job in English. Now imagine doing it everything in Chinese. If you feel comfortable then you're golden. Otherwise, no test or "proficiency level" would matter.

 
Aug 15, 2013 - 11:25pm

As for SE Asia deals, I personally did not work on any while in IBD but some of our teams have been looking at potential opportunities in that region. Generally teams in Singapore focus on that region. Korea was completely not on our radar.

 
Oct 16, 2013 - 11:56am

1. Can you comment on the general PE environment in Greater China now?
2. What are the funds doing in finding investment exits other than IPO?
3. Do you know what you will be doing in your new fund? Will it be banking 2.0 like it is in the States?
4. What do you expect to get out of the 2-3 years at the fund? Will it put you on a path to become a better investor?

Thanks,

 
Nov 7, 2013 - 8:00am

1. I can only comment on Mainland China. My general feeling is this market is definitely too crowded. There are way too many shops, both local and international ones, chasing not enough quality deals. The deals have always primarily been growth capital (think high growth companies targeting an IPO within 2-3 years). Buyout deals are rare for a variety of reasons but some of the main ones i can think of include the fact that most small medium enterprises in China have been founded by first generation entrepreneurs who are not in a hurry to retire and thus are not interested in selling. Also, on-shore leverage is hard to come by and levering up from offshore is a) not cheap, generally 2nd lien and b) not tax efficient.
2) Obviously funds would want to trade-sell when IPO markets are cold but trade-sales don't happen as often as one would like for a host of reasons. Sometimes you can't find a strategic who's interested in buying up a minority stake, other times it's a matter of foreign ownership restrictions.Secondary tradesales to other funds sometime do happen but valuation is an issue (why would another PE fund buy your stake out at a higher price than when you invested?) My fund was one of the first to do a dividend recap in Asia but that was not a Chinese Co and it had extremely predictable and stable cash flows.
3. Been on the job for 3 months now and it's been a blend of looking at investment opportunities, executing a transaction (kick off, DD, IC documentation, etc), and post-transaction management.Work has been pretty varied IMO with 30% of my time modeling, 20% of the time working on internal documentation, 20% on the road visiting companies, 10% random stuff, and 20% of the time in meetings. I don't travel as much as consultants but definitely much more than when i was in IBD.
4. Better investor for sure. I came in at a time when more than a few of our investments have tanked and it's been more about post-investment value creation i.e.working with the Ops team and trying to turn around the business by implementing new marketing, improving SOP, new business direction, etc. It's very educational for me to look at companies once they've gone sour, especially when you contrast with the the "investment highlights" prior to completing the deal.

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