"Science and Technology Innovation Board Daily" June 30 (special correspondent Tian Xiao) Recently, a number of S funds have been launched or are in the process of brewing all over the country, including the first S fund under the central enterprise.
According to the exclusive source of "Science and Technology Innovation Board Daily", China Merchants Capital plans to establish a special S fund in the second half of the year, and the project is currently progressing steadily.As an important investment platform under China Merchants Group, China Merchants Capital specializes in alternative investment and asset management business. By the end of 2021, China Merchants Capital will manage about 300 billion yuan in total assets.
Tian Yidi, executive director of China Merchants Capital, told the "Science and Technology Innovation Board Daily" that China Merchants Capital has been actively participating in the investment of funds of funds and second-hand share transactions. As an LP, it has invested more than 40 billion yuan in total. It is believed that China Merchants Capital has accumulated funds of funds. Ecology and industrial ecology can contribute to the sustainable and circular development of the private equity market and the rapid development of emerging industries.
FOF or special S fund?
As an important supplementary exit channel, S funds in the private equity market have attracted increasing attention in the domestic capital market in recent years.
According to data from ZERONE, in the whole year of 2021, in the secondary market of China's private equity, a total of 353 transactions have occurred, covering 337 funds, and the cumulative transaction amount that can be known is 66.807 billion yuan.Compared with the transaction amount of 26.445 billion yuan for the whole year of 2020, it has increased by 153%, and the compound growth rate in the past five years has reached 47%.
So far, a number of S funds have been announced this year.In April, the first market-making fund in the Beijing S fund market, the Beijing Science and Technology Relay Fund, was launched in Tongzhou District. The Science and Technology Relay Fund was initiated by the Beijing Local Financial Supervision and Administration and the Chinese Academy of Sciences. Private equity funds in the market, with a total scale of 20 billion yuan.
At the end of May, Nanjing’s first market-oriented S fund, Zijin Jianye S Fund, was established. The fund was jointly initiated by Nanjing Innovation Investment Group and Jianye High-tech Investment Group, with a total scale of 1 billion yuan. The main investors include Nanjing Iron and Steel Co., Ltd., Southeast Fund, Shengjing Jiacheng, Tianxin Investment, etc.
In the same month, led by Shanghai State Investment Capital, together with SAIC, Lingang Group, Ningde Times, Station B, CITIC Capital and other well-known institutions, the Shanghai Futeng Private Equity Fund was established to target equity investment in the primary market.The fund adopts the "F+S+D" strategy and will cover the entire product line of equity investment funds, direct investment funds, S funds and funds of funds.
In June, Hillhouse publicly stated that the S fund is its new strategy, it is forming a team, and there are plans to sell and buy assets through the S transaction.
On June 21, Wuxi Taihu Aisi Venture Capital Partnership (Limited Partnership) initiated by Xi Venture Capital was formally established.The target size of the fund is 2 billion yuan, and the size of the first phase is 500 million yuan.The fund will focus on the huge fund group of Xi Venture Capital, mainly investing in outstanding second-hand fund shares and specific projects in the sub-fund, focusing on new-generation information technology, medical health, dual-carbon energy saving, artificial intelligence, new energy, new materials , advanced manufacturing, consumer technology and other technological innovation fields.
Li Miao, founder and CEO of Zhizhong, an investment and trading service platform, introduced to the "Science and Technology Innovation Board Daily" that since the beginning of this year, S funds have been continuously raised and established, and venture capital guidance funds in local cities such as Wuxi and Nanjing have established S funds.The S fund established by Xi Venture Capital is an S fund established as a parent fund. The parent fund has the advantage of investing in LP shares, but it is relatively passive in strategy compared to the specially established S fund.Since the FOF's participation in the S fund is mainly to improve the DPI of the overall performance of the FOF, it is very interested in the DPI of the assets that have won the bid in the next two to three years.For some FOFs with an S strategy, the purpose of establishing an S fund is to use it as a tool to understand and contact new GPs, and to gain an in-depth understanding of the GP's investment situation, behavior, and openness through S trading, which is a completely new way than direct investment. The blind pool GP is more secure and stable.
Regarding China Merchants Capital’s attempt in the S fund, Tian Yidi, executive director of China Merchants Capital, said that China Merchants Capital has a large number of assets under management, and the total assets of the fund of funds account for about 40 billion. Because the fund of funds will naturally have some "F+S+D" strategy, so related S business has always been involved in each fund.Due to the perception of the current development opportunities of the S fund, starting from last year, China Merchants Capital intensively approached investment institutions and financial institutions, and prepared to set up a thematic S fund.Tian Yidi revealed to the "Science and Technology Innovation Board Daily" that "investors have basically been approached, and there should be voices in the second half of the year."
As an important investment platform under China Merchants Group, China Merchants Capital's attempt in the field of S funds is groundbreaking for the market.First, China Merchants Capital has rich assets, and its asset strength is valued by LPs; secondly, due to the short exit time, in the time limit product line, the S fund strategy is a very good supplement to China Merchants Capital; finally, China Merchants Capital Bureau Capital can increase the product path and scale through the S fund.
Tian Yidi said frankly in the interview: "We are very optimistic about this market. If you don't do it, others will do it. We have repeatedly discussed our own advantages and believe that China Merchants Capital is very advantageous in this product line."
Specifically, according to the statistics of the "2022 China Private Equity Secondary Market White Paper", there are 8 S funds announced in 2021. Among them, Guangzhou Emerging Growth Fund and Shanghai Science and Technology Center Phase II are the type of parent funds, and the remaining 6 are special funds. The S funds are Qixin Industry and Finance S Fund, Beijing Vision Relay Venture Capital Fund, Everbright Pilot S Fund, Suzhou Newerli Xince Equity Investment S Fund, Beijing Kechuang Relay Fund, Beijing Shou Development Huaxia Longying Relay Technology investment funds.
Demand pushes back the market
According to Li Miao, founder and CEO of Zhizhong, an investment and transaction service platform, compared with overseas, China's private equity secondary market is still in its infancy, and the current domestic annual transaction volume is only 1/10 of the US market.According to incomplete market statistics, in 2021, the scale of domestic S fund investment institutions will be about 50 billion yuan, which is still a small proportion of the overall private equity stock market.In early June, only one of the five leading institutions randomly interviewed by reporters from the "Science and Technology Innovation Board Daily" responded that it had sold some assets through the S fund in 2020.
Although the market share is not large, the market demand for S funds is not small.Tian Yidi said in an interview, "This market is enthusiastic enough and has enough volume."
Tian Yidi believes that private equity has been developed in China for 30 years, and the base of China's equity investment market is large enough. As an exit strategy for private equity, S funds will inevitably have a certain proportion and share in the market.In the current domestic private equity market, both the asset side and the capital side are not scarce, but the serious imbalance in the proportion of exit channels has become an industry problem.Only relying on exit methods such as liquidity repurchase or capital market is too narrow for the huge stock market.Therefore, the construction of S funds is directly related to the sustainable and circular development of the private equity industry, and it is the LPs who are eager to exit that are most concerned about S funds.
In addition, Tian Yidi also mentioned that most of the projects that can become S assets are in the open pool or semi-blind pool state. In fact, for investors, their DPI can be clearly calculated, and there should be certain certainty in financial calculation. sex.
Although few S-funds landed in China in the first half of this year, Tian Yidi said that as far as she knows, many institutions are eager to try.She believes that with the gradual easing of the epidemic, a batch of S funds may be launched in China in the second half of the year.
Lin Zhiqin, the relevant person in charge of the Beijing Equity Exchange Center, also told the "Science and Technology Innovation Board Daily" that at present, some small S-funds with an initial fundraising amount of around 500 million yuan have been established in China, and large-scale S-funds are mainly still in preparation for fundraising. At this stage, emerging buy-side institutions, such as insurance, bank wealth management, and asset management companies, are accelerating their entry.
For similar state-owned and central-funded institutions to enter the S fund market, the relevant person in charge of the Beijing Equity Exchange Center believes that the main advantage is that the difficulty of fundraising is relatively small, and it has certain advantages in obtaining S-share trading opportunities of state-owned and central-funded institutions.However, state-owned and central-funded institutions have a longer cycle in asset judgment, due diligence cycle and transaction consideration determination.
With frequent policies, how effective is the S fund?
On June 28, the Shanghai State-owned Assets Supervision and Administration Commission issued the "Guidelines for the Management of Private Equity and Venture Capital Fund Share Evaluation of State-Owned Enterprises in Shanghai", which took a new step in solving the problem of fund share evaluation of state-owned enterprises, and provided a basis for the evaluation of the transfer. The work provides a superior basis.
Since November 2021, when the China Securities Regulatory Commission approved the pilot program of private equity and venture capital share transfer in Shanghai’s regional equity market, Shanghai has successively introduced several supporting policies and measures, and other local governments also plan to introduce incentives for private equity transfers. .
Lin Zhiqin, the relevant person in charge of the Beijing Equity Exchange Center, told the "Science and Technology Innovation Board Daily" that the current S fund-related policies mainly play a guiding effect, allowing more institutions to pay attention to and understand the S market.The current core pain point of the S fund landing is fundraising. The promotion effect of the policy on the landing of the S fund is not the first time, but the policy will affect the choice of the registration location of the S fund.
Taking Beijing as an example, in June 2021, the Municipal Financial Supervision Bureau, the Beijing Securities Regulatory Bureau, the Municipal State-owned Assets Supervision and Administration Commission, the Municipal Finance Bureau, the Municipal Economic and Information Bureau, the Municipal Science and Technology Commission, and the Zhongguancun Administrative Committee jointly issued the "On Promoting Equity". "Guiding Opinions on the Pilot Work of Investment and Venture Capital Share Transfer" (Jing Finance [2021] No. 217), which provides a policy support system guarantee for the Beijing Equity Exchange Center's fund share transfer platform and S funds. Since then, Beijing has successively issued S funds. Relevant support policies provide policy guarantees for the landing registration of S funds, tax policies, etc. The promotion of policies, on the one hand, allows more fund shares (especially high-quality fund shares of state-owned assets) to have a guaranteed exit path. It has attracted some S funds to land; on the other hand, it has allowed more institutions to understand the S market and provided financial subsidy support, which has attracted more S funds to land in Beijing to a certain extent. The confirmed S fund raising scale has exceeded 350 billion.
During the interview, whether it is an investment institution, a service platform or a trading center, they all believe that the weakest link in the current domestic S fund ecosystem is that the market standardization and transparency are too low, and there is a lack of a credible platform or intermediary to provide Asset information disclosure or valuation report acceptable to both buyers and sellers.
Li Miao believes that valuation and judgment of assets in market transactions are very important, and private equity's unique fundraising and investment operation mode, "private" attribute determines its "non-disclosure" feature, but it does not mean the "privacy" of information. opaque".Improving the transparency and standardization of information can further stimulate the development of asset transactions, especially the secondary market transactions, and the generation and flow of transaction information such as evaluations and quotations in transactions will continue to improve the market's information transparency and assets. fluidity.
Tian Yidi believes that the country has issued some policies and made relevant regulations for the implementation of the transaction, but the guiding purpose of the policy needs to be more clear, not only to guide investment institutions and funders to participate in S funds, but also to guide national funds. , The local government's guiding funds are involved, and local governments can recover funds through the S fund to develop secondary or tertiary industrial clusters.
In general, the trading assets of domestic S funds are mainly growth-stage funds. The relevant person in charge of the Beijing Equity Exchange said that when the asset forms in the domestic market are more diversified, there will be LP-led, GP-led and other trading methods. Form, from passive transfer to active management, S transaction has become a normalized transaction form of private equity market transactions, which means that the S fund industry ecology is gradually maturing, and all these prerequisites also require policy guidance and time precipitation.
(Editor in charge: Ma Xin)
