HONG KONG - More Internet companies in China are turning to private share placements for funding that they could previously raise only from initial public offerings in overseas stock markets, Bao Fan, chief executive officer of China Renaissance Partners, said.

"We generally believe that the private market is already an alternative to the IPO market," Bao said in an interview in Beijing on Thursday, where China Renaissance is based. "These days, there is a lot of liquidity in the private market."

Bao, a former banker at Morgan Stanley and Credit Suisse Group AG, helped manage the $1.5 billion private placement this year by Chinese online retailer 360Buy.com, the biggest such transaction in the world's largest Internet market by users.

In the US, Facebook Inc raised $1.5 billion from a private financing round in January as the popular social-networking site expands its operations.

"Companies that have great potential should not rush to the IPO market - they can raise the same amount of capital in the private market at or close to the IPO valuations," Bao said.

"The 360Buy deal is a good example of that. It shows the depth and the efficiency of the private market."

China Renaissance was involved in nine merger-and-acquisition transactions last year, the second-most among Chinese investment banks, according to research company ChinaVenture Group.

360Buy.com said on April 1 that it raised $1.5 billion from six funds including Russia's Digital Sky Technologies and Tiger Fund, as well as some individual investors.

Last year, China Renaissance won work in transactions including the set-up of the online video venture between Baidu Inc and Providence Equity Partners, and the US IPO of E-Commerce China Dangdang Inc.

Bloomberg News

(China Daily 05/03/2011 page16)