Morrison Foerster (MoFo) has announced the appointment of Rongjing Zhao as private equity (PE) partner based in China.
Her appointment, effective March 31, marks the firm’s fourth PE partner appointment this year, and follows the addition of Steven Tran and Tabitha Saw in Singapore, as well as James Beach, in San Francisco.
“Across Apac there is a lot of dry powder waiting to be invested and there are signs of renewed optimism for PE dealmaking in Asia this year,” Zhao told FinanceAsia.
"In particular, we believe that economic growth will heat up faster in China than in the US, EU or UK, due to the lifting of Covid-19 restrictions… and actions taken by the Chinese government to revive the market,” she said.
The MoFo team expects PE dealmaking in the region to rebound after 2022 marked the weakest period for the asset class in five years. S&P Global counted just 208 PE transactions with a total value of $35.43 billion last year, down from 347 deals worth $74.08 billion, in 2021.
According to consultancy, Bain & Company, dealmaking fell 44% as dry powder in Apac rose to a record $676 billion last year, with venture funds and fund-of-funds (FoF) accounting for most of the build-up.
“As portfolio companies start to demonstrate a robust recovery in their second and third quarter operations and business performance, fund managers are likely to adopt a more proactive and opportunistic approach to dealmaking despite continued geopolitical rumbling,” Zhao explained.
“This renewed confidence may translate into more active capital deployment, as investors seek to capitalise on the substantive growth and strong economic fundamentals in the region, as well as take advantage of unique investment opportunities,” she added.
Due to elevated valuations, Zhao expects fewer investments in growth companies this year. In contrast, she believes buyout deals – where PE investors can implement operational improvements to add value – could gain traction.
“Overall, the competition for quality assets is expected to be quite fierce this year,” she noted.
The PE sector’s robustness will face the test of interest rate hikes this year, as higher costs of borrowing cut into PE returns and supress valuations. In contrast, private credit (PC) offers resilience during interest rate hikes, due to its floating rate nature. Zhao confirmed that the firm’s private funds practice had seen rising demand from asset and alternative investment managers looking to launch new PC vehicles in the region.
Following her appointment, MoFo counts over 50 dedicated PE or M&A lawyers in Asia, based across mainland China, Hong Kong, Singapore and Tokyo, a spokesperson for the firm told FA. Globally, the firm has added over 20 PE partners since 2019, both through new hires and promotions and the practice is overseen by co-chairs, Hong Kong-based partner, Marcia Ellis, and San Francisco-based Patrick Huard.
Zhao will work between the firm’s offices in Beijing and Shanghai. She joins from Kirkland & Ellis where, according to her LinkedIn profile, she spent eight years; first as an associate in Hong Kong and later a partner in Shanghai. Earlier, she worked at O'Melveny & Myers in Los Angeles and Hong Kong.
Zhao’s experience includes representing China and Asia-based PE firms, institutional investors and corporations on cross-border leveraged buyouts, growth capital investments, distressed M&A transactions, and other deals. She has also advised on take-private deals involving US-listed companies.
Flagship PE transactions that the MoFo team has been involved in include: SoftBank’s transfer of a 25% stake in semiconductor firm, Arm China, to its Vision Fund ahead of the US listing of Arm’s parent company; and Nasdaq-listed special purpose acquisition company (Spac), Silver Crest Acquisition Corporation’s combination with TH International, the franchise operator of Tim Hortons coffee shops in China.
The firm also advised a committee of independent directors associated with Alibaba Group in the firm’s acquisition of a 33% equity interest in Ant Financial.
