Managers of renminbi-denominated private equity funds are at a ‘transformational’ stage following a period of consolidation, as they move to build up their operational teams and become more familiar with new industries, said PE investors at a forum this week.

On the first of the two counts, however, they have not got very far, argued David Hong, partner at Chinese fund-of-PE-fund manager Gopher Asset Management, speaking at AVCJ’s Private Equity & Venture Forum this week in Hong Kong.

Many renminbi fund managers are hiring more senior operations professionals to strengthen their post-investment functions, said Hong, whose firm manages Rmb7 billion in assets. He put such moves down to the fact that they have too many deal commitments to cope with due to “the renminbi investment PE bubble” three years ago. Yet he said he didn’t think this had led to stronger operations expertise so far.

Hong added that today most renminbi PE and venture-capital firms focused only on two areas – telecoms, media and technology (TMT) and healthcare. These funds now tend to focus on venture and growth capital rather than traditional, late-stage PE, he noted. Three years ago local renminbi PE firms were good at traditional-sector and pre-IPO deals, added Hong, but now they need to improve their understanding of newer industries.

Speaking on the same panel, Fang Xiangming, who heads PE investment for China Reinsurance’s asset management arm, was more positive on these managers’ progress.

RMB private equity funds are “getting more mature and healthy” than they were two to three years ago, she noted. Since then, consolidation has taken place and the industry is at a “transformational stage”.

Developments elsewhere have helped on this front. While many local securities houses used to focus on IPO mandates, noted Fang, now they are trying to help clients find target companies. She pointed to a greater focus on improving post-investment operational efficiency and corporate governance.

But she also cited challenges for mainland PE firms, including a continuing lack of availability of exits via IPOs, though she said the situation would “get back to normal” next year. “There are still lots of portfolio companies trying to have liquidation.”

However, Hong saw conditions for exits improving. China’s securities regulator is revising the listing rules to allow TMT companies that are not yet profitable to list and to establish an IPO channel for companies whose shares trade over-the-counter, he noted.

At the same time, added Hong, trade sales are picking up as A-share sentiment overvalues deals in which large shareholders in A-share companies participate in joint ventures to acquire assets owned by PE firms.

Other PE investors saw exit opportunities improving for Asian PE firms. “2014 is shaping up to be a reasonably good year for exits,” said Susan Carter, chief executive of Connecticut-based Commonfund Capital, speaking on the same panel.

The investment advisory firm has some $14 billion in PE commitments, with 15% allocated to Asia: 9% in China, 2% India and 1% each for Japan, Korea, Southeast Asia and Taiwan.

Meanwhile, Chinese insurers are showing more interest in foreign real assets than in offshore PE, said Fang. “Our peers are interested in buying real assets – in direct investment into different markets.”

China Re itself has an overseas insurance business that generates US dollar revenue, she noted, which meant it was a relatively early investor in international PE among Chinese insurers.