Orchid Asia's Gabriel Li on China Investments

Filed in archive Venture Capital on February 14, 2006

As part of CVN's new weekly China VC interview series, I managed to catch up with Gabriel Li, managing director of Orchid Asia Investment as he makes plans to return to China. Orchid Asia Group Management Ltd. recently closed its third fund, Orchid Asia III, LP, raising more than US$180 million. Li has been investing in China for over ten years and is widely regarded as one of the first international private equity investors in China.

His bullish attitude about China's venture capital future and the advent of more Chinese-style entrepreneurialism is fueled by his fund's earlier successful first round investment in Ctrip.com International (Nasdaq:CTRIP), a leading travel service provider
specialized in discounted air ticket and hotel reservation in China, which returned over 20 times the initial investment. Orchid Asia also invested in the first round of Eachnet, the largest online acuction company in China, which was
subsequently sold to eBay (Nasdaq: Ebay for about 5 times return.

" The Chinese government is committed to attracting more capital and stimulating growth and supporting more management expertise," stated Li in a telephone interview.

Li indicated that Orchid Asia's investment strategy includes seeking a Chinese company with at least a two -year operating history with excellent management already in place. Their typical initial investment is about $5 million with up to $15 million for the completed life cycle of that single investment.

Li's confidence in China's new enterprise development is tempered with a realistic assessment that some key industries like media, and telecoms will be slow in opening up to private equity opportunities for awhile longer.