The Gem Is Heating Up PE&Nbsp; The "FOF" Mainland Quietly Appears.

The gem which has been born for more than a year has contributed a lot of billionaires to China, and has also heated up the local private equity investment.

Along with another equity investment fund (PE) has become the "Star" in the public eye, with PE. Scout The so-called "FOF" (fund in the fund) also began to appear quietly.

Gem create wealth effect PE

Data from the Shenzhen stock exchange show that as of now, the gem has attracted 158 companies to land. Abnormal distribution Market surplus Rate, Not cheap The stock price makes the PE of the stealth rich.

Under the stimulation of the "making the rich" effect of the gem, the PE family in mainland China shows signs of accelerating expansion.

According to a report from PE professional research institutions, 50 funds were raised in the first three quarters of 2010, representing an increase of 2/3 compared with the same period last year. The size of new funds increased by more than US $21 billion, an increase of 164% over the previous year.

But for PE, it is not easy to find projects that really have investment value and listing potential. "Limited by manpower, experience and other factors, the traditional direct investment in PE can only focus on one or a few specific subdivision industries. Once the front line is too long, it may affect professional judgment, resulting in increased risk." Yang Xu, senior vice president of Shanghai Ou Qing Asset Management Co., Ltd.

Yang Xu's worries are not groundless. Globally, the low success rate makes PE have to face the embarrassment of most investments. According to the internal statistics from intermediaries, the annual rate of return from the PE investment in 20 years is 9.6% and 11.8% respectively in Europe and the United States. In the US, the annual PE yield of the first quarter of the performance is 30.2%, while the remaining 3/4 is in a state of small profits or even losses.

For China's PE managers, because of the concentration of investment industry, they should always guard against and deal with the negative impact of the economic situation, policy environment or other factors on these industries. On the other hand, the narrow vision also makes them lose their interest in many industries benefiting from the sustained development of China's economy.

FOF: chasing the "star of tomorrow" in PE

Against this background, the fund, which focuses on investing in PE Fund (FOF or portfolio fund), appears quietly in the mainland of China. As the first generation of FOF in mainland China, Shanghai's Cci Capital Ltd has focused its attention on the small and medium sized PE with "tomorrow's star potential".

"In a sense, we are the" scout "and fundraising manager of the emerging equity fund and the" wealth manager "of equity fund investors. Lin Jingyi, executive partner of prosperity, said.

Compared with the traditional direct investment PE, FOF has broader vision and wider investment field. By investing directly in PE of different types or industries in the portfolio, FOF can enter more industries, including infrastructure, consumption, high technology and even artworks, so as to share the fruits of economic growth evenly.

In addition, direct investment in PE usually sets a higher threshold for investors, which affects the flexibility of investment to a certain extent. Through indirect investment in FOF, PE can share the industry's high growth with the help of professional investors. At the same time, it can achieve flexible and balanced investment allocation. In this sense, FOF is more in line with the investment law of "putting eggs in multiple baskets".

In fact, in mature markets, FOF has been active in the PE field for many years. According to data from Research Institute Preqin, the global FOF market began to heat up in 2003 and reached its peak in 2007, when there were 160 FOF funds with a total scale of over $56 billion. As of November 2009, there were 55 FOF funds in the world, with a total subscription amount of US $20 billion 700 million.