Lewis Rutherfurd
Managing Director, Inter Asia Venture Management

Visit Date: October 17, 2002
Class Topic: Private Equity in Asia

Center for Private Equity and Entrepreneurship: What topics did you discuss today in Tuck's Private Equity Finance class?

Rutherfurd: Generally, I explained my team's private equity strategy and why it works in Asia. Specifically, my team's China strategy was a focus, as was money raising in Asia. We also spent some time talking about exits and deal flow. Finally, some students had questions about how I got into the business, and I answered those as well.

Center for Private Equity and Entrepreneurship: In a nutshell, what is your "China strategy?"

Rutherfurd: We generally follow four guidelines:

1. We only get involved in projects/companies that we initiate. Going concerns need not apply unless we know the entrepreneur, can add value, and can exert control.
2. The company must have wholly owned foreign enterprise status (WOFE), have no local partners and be government-approved.
3. We must own a big piece of the concern.
4. We must know in advance who is going to buy the company.

Center for Private Equity and Entrepreneurship: What kind of legal issues does investing in China raise?

Rutherfurd: There are some signs that the Chinese government is finally sticking its neck out and becoming accountable to foreign investors. Government officials recently signed WTO and the Kyoto protocol, so that's progress. Citibank is buying into a company in the financial sector, which the government. previously didn't allow. Our firm is invested in the food sector. The big engine for economic growth in China is foreign investment; everyone knows that. But, whereas before it was just a big land grab, now China has to become accountable to those who invest there.

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