Mahon China assists investors to realise value from stressed assets and stalled private equity funds in mainland China.

We also advise foreign companies on market entry and growth strategies, help them to acquire assets, identify and assess partners, and forecast the Chinese economy.

The highest virtue is like water: it benefits everything without exciting rivalries. We should be like water. Laozi, fifth century BC

About us

Mahon China is a partnership based in Beijing and operating throughout China.

Chinese high-speed train, Nick May

Mahon China was founded in 1985 by New Zealander David Mahon and was a pioneer of private equity in the mainland. The firm managed five funds which realised high returns for investors, and successfully exited from its fifth fund at the end of 2016.

Mahon China also restructures and exits assets, be they stalled funds, stressed equity investments, or nonperforming loans to Chinese companies.

For three decades Mahon China has advised multinationals and small/medium enterprises on their China strategies. The firm’s expertise includes China’s agriculture, food & beverage, specialised manufacturing and technology, and services sectors.

Meet the Mahon China team.

Realising returns

Mahon China maximises returns for investors through restructuring and exiting their investments.

Greenhouse in Hangzhou, Andy Brandl Vegetable market vendor, Andy Brandl

Many China-invested private equity (PE) funds and foreign direct investments in Chinese companies established over the last eight years are now struggling for exits.

Mahon China has helped clients — including Limited Partners of funds, development finance institutions and banks — exit and realise value from more than 20 foreign investments in China.

Mahon China began managing China-focused PE funds in 1992, as one of the country’s first PE fund managers.
We have managed five PE funds, ranging from single-investor and traditional GP/LP-structured funds to listed investment companies with more than 1400 shareholders in multiple jurisdictions.

Mahon China is currently General Partner of a PE fund for European and North Asian public- and private-sector interests. We also manage a range of direct investments on behalf of large institutional investors.

Selected PE track record

> Mahon China developed a plan to restructure and recapitalise a diesel engine manufacturer to allow the company to buy out the fund’s equity stake. The company relocated and shifted its product focus to diesel-engine power supplies, which are now sold throughout China and in 10 export markets.

> Mahon China helped a large steel manufacturer to develop and introduce higher-margin products into the market, which the company supplied to VW and General Motors. With Mahon China’s assistance, the steel company’s profits grew seven-fold in two years. Mahon China sold its equity stake when the steel manufacturer was granted initial listing approval.

> Mahon China negotiated an exit from an investment in a major condiment manufacturer by leveraging the company’s breaches of contract. The exit constituted an IRR of approximately 22%.

Corporate advisory

China remains an opaque and complex market.

Suntech worker in Wuxi, Lucas Schifres
Solar panels in Urumchi, Philip Game

Mahon China draws from its hands-on experience in making and managing Chinese investments to assist companies and funds in developing and executing strategies, and to resolve client problems.

We offer:

• Boardroom advisory

• Tailored research into Chinese companies, sectors, and market trends for hedge funds and other investors

• Development of China market entry and expansion strategies

• Assessment and establishment of Chinese teams

• Identification of partners and due diligence

• Fundraising

Selected advisory track record

> Mahon China has facilitated client investments in excess of USD 150 million in sectors ranging from agriculture and food & beverage to technology and services. We have assisted foreign companies to acquire land and other assets in major cities and remote rural areas.

> Mahon China played a key role as crisis advisor for Fonterra during the 2008 melamine incident.

> Mahon China successfully engaged in arbitration on three occasions on behalf of its foreign clients.

> Mahon China advised a Chinese city to identify international partners for its development project and has assisted Chinese companies to acquire assets globally.

Our team

Mahon China’s team is based in Beijing, with partners in the UK and Australasia.

David Mahon

Executive Chairman

David provides strategic leadership for the team, from deal origination to negotiations with potential exit partners.

• Managed five private equity portfolios in China and held direct responsibility for the management of over 20 Chinese companies

• Served on the boards of international and Chinese financial and industrial firms

• Three decades of experience advising multinationals entering and growing in the Chinese market, and analysing the Chinese economy

• Writes and publishes China Watch, a quarterly review of China’s political and economic developments; regular commentator in the Chinese and international news media

• Resident in China since 1984

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Charlie Gao

Partner

Charlie is a core member of Mahon China’s investment and advisory practices. He is based in New Zealand and was formerly the firm’s managing partner.

• Serves as the main interface for a number of the firm’s Australasian and European clients

• Managed and exited private-equity investments in the Chinese condiments, beverages, and clean energy industries on behalf of international financial institutions

• Leads advisory projects serving a range of multinational and SME clients, with a focus on agriculture and technology

• BSc, BA (Hons), and MA (Hons) from the University of Auckland

• Speaks English and Mandarin as first languages

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Mei Xiaorong

Partner

Ms Mei manages Mahon China’s private equity funds business, is a core member of the investment practice, and handles legal and accounting compliance.

• Developed and successfully implemented exit strategies for a range of special situation assets

• Undertook due diligence across sectors including logistics, textiles, infrastructure, and specialized manufacturing

• Originated and managed a private equity fund focused on the retail industry; possesses over 20 years of experience in Chinese private equity with Mahon China

• Prior experience with one of the earliest Sino-foreign joint ventures in China, and Inchcape

• Postgraduate finance and economics degree from Capital University of Economics and Trade

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Zhang Yike

Senior Partner

Yike leads Mahon China's engagement with Chinese officials and stakeholders, and is an experienced restructurer and manager of factories.

• Member of the Mahon China team since 1995, beginning in the role of senior investment manager

• 11 years’ experience managing large SOEs employing more than 1000 employees, including: Beijing No. 1, No. 7 and No. 12 Rubber Factories; Beijing No. 1 Rubber and Plastic Factory; and Beijing Global Rubber Factory

• 12 years’ experience managing international and joint-venture companies

• Served as board chairman of Maqi Sporting Shoes, president and general manager of Furniture Origins Group Co., and China CEO of US-listed Hendrix Corporation

• Manages investee companies and oversees investments and M&A deals on behalf of Mahon China

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Jessie Sui

Managing Partner

Jessie leads the Mahon China team and the firm’s investment and advisory practices.

• Provides leadership for the team across the entire investment process, from due diligence to exit

• Co-ordinates and negotiates with key stakeholders to develop and execute exit strategies for funds, direct investments and distressed assets

• Recommends market entry and growth strategies for international firms

• Previously managed a team of 16 specialists at Thomson Reuters’ financial information division, providing financial research and data analysis for investment banking clients

• BA (commerce) from Birmingham University; MSc (accounting & finance) from the University of Bath

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XY Zhang

Chief Financial Officer

XY ensures the accounting and tax compliance of Mahon China and its funds, and develops financial strategies to provide stability and improved efficiency.

• Oversees accounting compliance for funds managed by Mahon China

• 30 years’ global accounting, audit, tax, and financial management experience within and outside China

• Formerly CFO of McDonald’s China, audit director at the largest Chinese CPA firm, and a senior business consultant with Arthur Anderson

• MA from the PRC Finance Ministry Institute

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Hugh Swire

Partner (EU)

Hugh first worked for Mahon China in 1999 and rejoins the firm, based in London, following a decade with investment banks and funds across Asia.

• Supports the firm’s UK/EU-based clients with investments and corporate activities in China

• Provides bespoke research for investment firms into listed and unlisted Chinese companies

• Specialist knowledge in low-carbon water, energy, and technology businesses, with direct experience of helping companies to find partners and expand in China

• Advised clients on Japanese equities for Nomura in Tokyo and as Vice President worked in Asian equity derivatives for JP Morgan in London

• BA (Hons) in Chinese from Oxford University

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Ming Chou

Advisor

Ming monitors and analyses China’s dairy, agriculture and FMCG sectors for Mahon China’s advisory practice.

• Conducts macroeconomic and sector research, analyses company financials, and carries out competitor and risk analysis

• Tracks regulatory developments and consumer trends in China for advisory clients

• Formerly associate portfolio manager at SFP Investment Advisors

• BA (Hons) from the University of California at Irvine

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Huang Jingjing

Investment Manager

Jingjing manages Mahon China’s third-party service providers, undertakes research, oversees project logistics and develops new business opportunities.

• Advises foreign companies on regulatory compliance in China

• Conducts due diligence and research in sectors which include agriculture, food & beverage and retail

• Manages third-party advisors in an administrative role

• Works with team members and clients to arrange project logistics

• Accounting degree from Lianhe University

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Candy Wang

Investment Manager

Candy analyses the Chinese agriculture, food & beverage, and dairy sectors on behalf of Mahon China’s advisory clients.

• Undertakes sectoral, industrial, and company-level research and analysis, with a focus on China’s evolving agricultural markets

• Advised international dairy companies on their Chinese expansion strategies

• Provides commercial support on a multi-project basis for the firm’s partners

• Experience supporting the senior managements of large-scale International insurance and asset management institutions in China

• BA from Hebei University of Economics & Business

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China Watch

Summer-Autumn 2016

Issue #113

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China Watch

China Watch is a quarterly review of the Chinese economy and evolving business environment, written by David Mahon.

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Centeredness is the cure for impulsiveness.
Serenity is the master of restlessness.

Laozi, fifth century BC