Slow Progress Of Insurance PE In One Year

Last September, the CIRC issued《 Insurance The Interim Measures for Capital Investment in Equity (hereinafter referred to as the Interim Measures) formally liberalized insurance funds to participate in private equity financing of unlisted enterprises. However, one year after the regulator released insurance funds to invest in PE, insurance funds entered the market with huge funds, but the pace of progress was not smooth.

Statistics show that by the end of 2010, the total assets of the insurance industry had exceeded 5 trillion yuan. According to the requirement of not exceeding 5% of the company's total assets at the end of last quarter, the upper limit of insurance funds participating in PE investment would exceed 250 billion yuan. Rough calculation shows that China Life Group alone can invest 88. 8 billion yuan in PE funds, while Ping An, CPIC and PICC can also invest more than 20 billion yuan.

The huge scale of funds is exciting. However, for most of the insurance funds, it is difficult to handle huge funds due to the harsh investment standards and other reasons, and even has the problem of "no rice in the pot".

The Interim Measures have detailed provisions on the investment strategies of insurance companies. For the purpose of preventing and controlling capital risks and ensuring returns, the direct investment in the equity of unlisted enterprises is clearly defined, "only for insurance enterprises and non insurance enterprises" finance Equity of enterprises and pension, medical, auto services and other enterprises related to insurance business. "

Under the restrictions of strict supervision and risk control, all insurance companies are highly consistent in their investment strategies for direct investment, preferring mature enterprises in consumer goods, infrastructure construction, energy, manufacturing, medical and other industries, and their investment methods are mostly pre listing investment or M&A related investment.
In the field of indirect investment, that is, investment in PE funds, insurance funds have achieved little. For insurance companies investing in PE funds, the Interim Measures are quite strict. They not only define hard indicators such as the registered capital and the balance of managed funds of fund management companies, but also clearly require that they should not invest in venture capital funds, venture capital funds, or invest in or participate in investment institutions.

According to this standard, the number of funds available for insurance companies in the domestic PE market is very small. According to the statistics of China Venture Investment Group, only China Life Group and Ping An Group have invested in two funds, both of which are industrial funds with government background. At present, there is no pure market-oriented PE fund that can win the favor of insurance companies.

Chen Shiyou, the general manager of CICC's direct investment department, called for the liberalization of insurance companies' investment in PE. "Although the relevant regulations have been issued last year, the relevant implementation rules and procedures have not been resolved. In fact, domestic insurance companies have the same demand for asset allocation as foreign insurance companies, and various insurance companies are calling on the CIRC to speed up its policies."

In addition, the lack of professionals and teams has always been one of the main bottlenecks preventing insurance companies from participating in PE investment. Ping An and Guoshou have set up a special equity investment platform, but other insurance companies currently use their asset management companies as platforms to set up equity investment teams.

China Venture Investment Group believes that one year after the gate is opened, insurance funds PE The investment progress is still relatively slow, mainly due to the uncertainty of regulatory policies. It is understood that the equity investment of insurance companies must be submitted to the CIRC for approval and filing one by one through "one case one discussion", which has greatly affected the investment efficiency.

The equity investment of insurance funds has been open for one year. At present, its impact on the PE market is limited. According to the analysis of China Venture Investment Group, its direct investment and indirect investment still have many restrictions such as industry and scale, so it has no substantial impact on the competition pattern of the domestic PE industry.

However, ChinaVenture Investment Group also pointed out that the pace of insurance funds participating in PE is gradually accelerating, with reference to the policy supervision trend of brokers participating in PE investment in recent years, and it is possible to release insurance companies to engage in PE fund raising in the next two to three years. Whether the large-scale insurance capital can occupy a place in the domestic PE industry in the future depends on such market-oriented factors as decision-making mechanism, investment efficiency, risk control level and team incentive.