Yao Ming, China’s elder statesman of basketball, is taking a giant leap into mainland private equity, teaming up with two onshore firms that are raising funds and pursing deals in China.
In July last year – the month Yao announced his retirement from the US National Basketball Association – he took part in an investor consortium that took over a fund run by ES Capital Group, which had up to Rmb10 million ($1.5 million) in registered capital, according to mainland media.
The firm, which has since been renamed Chongqing Yufu Assets Management Group, is said to be closing in on its first round of fundraising under its new management, with a maximum target set at Rmb500 million.
Yao’s other PE affiliation is with D&F Capital, a sports-focused buyout shop set up last year by his agent Lu Hao – a former mainland university basketball coach. D&F is in the process of raising capital for the Douglas Fir Fund, China’s first PE vehicle focused on the sports industry. It is targeting a first close of Rmb200 million.
While there is yet no word on the amount that Yao has invested in either PE firm, he has reportedly been using his prominent name to help capital-raising efforts.
“Yao’s star power could be conducive for fundraising,” says Joseph Chang, head of the Hong Kong office at SCM Strategic Capital Management, a global institutional advisory firm for private market investments.
While Yao’s pulling power may not be as strong among more sophisticated investors, his persona could help to source deals in sports-related businesses, Chang notes.
Yao’s personal investment record is varied and includes stakes in struggling GPS equipment-maker Beijing UniStrong, the Shanghai Sharks basketball team, digital music site Top100.cn and a Californian winery.
Says Chang: “Investing one’s own money is one thing, but investing on behalf of institutional investors professionally is a totally different matter.”
Prospective investors need to assess the institutional quality of the two PE firms that Yao is linked to, he adds.
Yao first stepped into the global spotlight a decade ago after becoming the NBA’s tallest player at 2.29 metres and earning a name as one of the league’s most-watched talents. His golden reputation was enhanced by his clean living and hard work ethic.
Yao’s ability to transfer his star power from the basketball court to the boardroom will be tested, however, as a growing number of PE firms jostle to raise capital for China-focused funds.
Both onshore and domestic firms are attempting to raise a combined $82 billion in new capital, according to figures from consultancy Bain & Co – more than double the $32 billion raised in 2011.
At the very least, Yao’s name could help raise awareness of the little-known funds to which he is associated.
U2 lead singer Bono brought a glittery touch to US private equity firm Elevation Partners, which he co-founded in 2004. He serves as a managing director at the firm, which takes its name from the U2 song Elevation, and is touted as having a deep understanding of how the entertainment industry works.
However, unlike Bono, whose $1.9 billion PE firm has endured an equal measure of criticism and acclaim for its investments in the media, tech and entertainment sectors, Yao has returned to school to brush up his business acumen. The ex-athlete spent the past year studying at the Antai College of Economics and Management at the Shanghai Jiao Tong University.