PE/VC Hot Discussion On The Gem Registration System: The Listing Threshold Has Not Dropped, The One Or Two Level Price Difference Has Narrowed, Which Will Test The Ability Of Post Investment.

In April 27th, the overall implementation plan of the gem reform and pilot registration system was officially released, and the capital market ushered in another dividend of registration system reform.

Many PE/VC industry members told the twenty-first Century economic report reporter that the gem registration system will directly benefit the exit of private equity investment institutions, and achieve a virtuous circle of investment and withdrawal, and enhance the liquidity of innovative capital. Especially in the current environment, the announcement of the implementation plan helps to boost market confidence.

The gem mainly serves growth oriented innovation and entrepreneurship enterprises. It supports the deep integration of traditional industries with new technologies, new industries, new formats and new modes, and forms a differentiated positioning with the "hard technology" characteristics of the science and technology board. The landing of the two sector registration reform will directly promote the formation of long-term innovative capital.

The PE/VC investment holding the long-term value investment concept further promotes the registration system in a more rational way: they all clearly indicate that registration system does not mean that the listing threshold is lowered; with the narrowing of the valuation level of the one or two tier market, the investment organization should not only have the ability to identify outstanding projects, but also increase the value of the investment enterprises through the post delivery services.

Source star capital Zhuo Fumin:

Stock reform is the important significance of the registration system of gem.

China's capital market is just 30 years from the Shanghai stock exchange and the Shenzhen stock exchange.

If we say that the registration system of Ke Chuang plate is an incremental reform, the registration system of gem is the reform of stock. The difficulty of stock reform is higher than incremental reform, which is also the important significance of the registration system reform of gem. After the success of the gem pilot project, it will be extended to the motherboard and small and medium-sized boards.

As an investment veteran, I participated in the drafting of the Provisional Regulations of the stock exchange in 1992. Since then, China's capital market has made considerable progress in the past 30 years, making remarkable contributions to economic and social development.

A series of reforms such as the launch of the science and technology board, the pilot registration system and the registration system of the gem have been the biggest in China's capital market in 30 years, and its sustained effect will also be reflected in the longer term future.

Another feature of this gem registration system is the clear positioning of the GEM board and corresponding to the Chuang Chuang board: the "Chuang Chuang board" is mainly "hard", emphasizing hard core technology, strategic emerging industries and hi-tech enterprises. After the reform, the gem is based on "soft" and "carrot and stick", which includes both mode innovation, service innovation and business innovation, as well as traditional industries. Deep integration with new technology, new mode, new format and new application.

For PE/VC institutions, we have invested in a large number of small and medium enterprises, especially the small and medium-sized enterprises of science and technology, after more than 20 years' efforts. The further promotion of multi-level capital market construction, especially the registration system of Chuang Chuang plate and the launching of double fist of gem registration system, have accelerated the pace of stock elimination for PE/VC institutions, and also helped investment institutions recover funds for benign recycling investment, which helps alleviate the difficulty of raising capital in the current investment structure, thereby contributing to the formation of long-term innovative capital.

Some people think that the gem registration system has lowered the listing threshold. I do not agree with this view. For those who do not conform to the listing standards, the regulatory authorities have a clear understanding and institutional arrangements. As investors, we should be especially conscious when choosing investment targets, and choose high quality and high integrity enterprises.

Of course, every good thing in the capital market is inevitably accompanied by a wave of irrational hyper investment, which happened during the launch of the gem, the new third board and the Chuang Chuang board. When the one or two tier market arbitrage space is getting smaller and smaller, investors need to treat investment targets rationally, that is, to have professional project judgment, and to provide value-added services for enterprises.

Qiming venture Hu Xubo:

The gem registration system will further release PE/VC vitality.

In April 27th, the central Shenzhen Commission for reform and development adopted the implementation plan of the gem registration system. China's capital market has entered the "deepwater area" of reform under the background of the global spread of the new crown pneumonia epidemic and the enormous challenges facing the financial market.

As the pioneer of reform, Ke Chuang board has explored the registration system for more than 18 months in the past, and provided ample and useful experiences and lessons for the pilot registration system of gem.

It is foreseeable that the science and innovation board and the gem will form the "NASDAQ" with Chinese characteristics together: facing the world's leading edge of science and technology, facing the main battlefield of the economy, and facing the major needs of the state, serving the listed companies of science and technology innovation corresponding to the national strategy, breaking through the key core technologies and highly recognized by the market, and realizing the traditional industries and new technologies and industries. The new form and new mode of deep integration of growth oriented innovation and entrepreneurship enterprises correspond to the growth enterprise market listing. The two sides will complement each other and will soon catch up with each other and push forward the development of China's capital market.

We have noticed that since the reform of the listing system in Hongkong in April 2018, TMT and health care companies have been attracted by the launch of the science and technology innovation board in mainland China. The reform of gem registration system will further enhance the attractiveness of enterprises, and enable the capital market to serve the new economy more efficiently and enhance the competitiveness of Chinese enterprises characterized by technology and innovation. Therefore, we expect that enterprises will prefer to choose Hongkong, Shanghai and Shenzhen as the destinations for listing.

In terms of exit, the company is trying a more flexible way to reduce its holdings. In April 17th, the Shanghai Stock Exchange issued the implementation details of the Shanghai stock exchange's listed company shareholders in the non-public transfer and placement way, and tried to guide PE and VC to exit orderly. This will make the main participants and promoters of the venture capital market -- PE and VC institutions more capable. With the attempt to release vitality, the gem will accelerate the cycle of innovation capital of PE and VC institutions.

What needs to be reminded is that the registration system has brought many benefits to the enterprise IPO, such as improving predictability and enhancing transparency, but "fighting iron needs to be hardened". Whether it is the science innovation board or the gem, it is welcomed that the enterprises with core competence, good fundamentals and growth will not be understood as the lowering of the listing threshold.

Investing in Chen Lizhi:

Gem registration system will improve the efficiency of venture capital market utilization

There are differences between gem and Chuang Chuang board in terms of function orientation, listing standards, investors' entry threshold, sponsor institutions and speculation system.

Specifically, the science and technology board emphasizes the originality and breakthroughs of technology, focuses on "hard technology", and the adaptation scope of gem is relatively wide, focusing on the integration of existing stock technology and traditional industries. In terms of listing standards, Ke Chuang plate has a higher demand for the market value of listed companies, but the demand for profitability is more relaxed. Allowing unprofitable or even unprofitable enterprises can also be listed, and the gem has certain requirements for profitability.

Overall, the technical threshold, listing threshold and investor access threshold of the science and technology board are higher than that of the gem. Under these differences, the gem has wider audience and stronger liquidity, and there is a certain liquidity premium.

In addition, for the specific choice of plate, in addition to the consideration of liquidity premium and scarcity premium, the efficiency of different sectors for the listing audit is also an important factor to consider. Enterprises will prefer the plate with high efficiency and fast progress.

For PE/VC institutions, the launch of the gem registration system provides a new and wider channel for project exit, especially for mobile Internet, cultural entertainment, and traditional industrial transformation. The smooth exit of institutions will also improve the efficiency of venture capital market.

The introduction of the gem registration system mainly reflects two aspects: the first is to boost investors' confidence in the primary market and to ease the problem of fund-raising. The two is to invigorate primary market investment and promote orderly investment in the primary market.

In the long run, its impact on venture capital institutions includes accelerating industry mobility, improving venture capital market "positive cycle", promoting investment institutions' survival of the fittest and narrowing the one or two tier market liquidity premium.

Promoting the registration system has a similar impact on RMB funds and US dollar funds. In the long run, it is conducive to truly adhere to the value investment fund.

Of course, compared with the US dollar fund, the withdrawal channels of RMB funds are few. The implementation of registration system will greatly widen the exit channels, and its positive impact is obviously greater. However, the registration system is likely to be a double-edged sword for the RMB fund focused on the one or two tier market arbitrage and the short-term price difference.

Cornerstone capital Zhang Wei:

It is recommended that outstanding venture capital companies be listed on the growth enterprise market.

The reform of the gem is an important measure for the market-oriented reform of the distribution system and an important strategy for the construction of an innovative country.

This reform will further define the gem as "the main service growth oriented innovation and entrepreneurship enterprise, supporting the deep integration of traditional industries and new technologies, new industries, new formats and new modes". Compared with the science and technology board which mainly supports hard technology, the gem emphasizes more on promoting the upgrading and upgrading of the traditional industries, and increasing the tolerance of the plate in the scope and scope of the industry.

At the same time, the reform of gem takes the form of negative list, and it is clear that which enterprises can not go to the gem listing. In essence, it expands the registration system from "hard technology" to all fields outside the negative list, which can be considered as an important step in the registration system from a small scale to a comprehensive registration system.

For venture capital institutions, first of all, more enterprises are expected to withdraw from the gem, which will expand our investment scope. Secondly, the exit channels are more open, and venture capital institutions can better realize the virtuous circle of "raise investment, manage and withdraw", greatly enhance the liquidity of innovative capital, and then provide support for more enterprises and further improve the ability of serving the real economy.

On the basis of the gem reform and the pilot registration system, in order to better serve the construction of the real economy and innovative economy, we recommend that a number of excellent venture capital institutions be allowed to go on the gem.

This reform is undoubtedly comprehensive and thorough. However, the perfection of the basic system of capital market is a huge project. There are still many concrete systems to be explored and solved. For example, we can see that in recent years, private equity firms have been enriching the direct financing system and serving the real economy, and the role of innovation and development in the real economy has become increasingly prominent. If private equity institutions are allowed to go public, they will further enhance their ability to support innovation and Entrepreneurship.

The relationship between venture capital and technological innovation is inherent. It has a very important contribution to the innovation of high tech enterprises and the development of new economy. At present, most major capital markets in the world have allowed private equity institutions to go public, and hundreds of private equity funds listed worldwide.

The development of the new economy needs the support of the new capital market system. Shenzhen is the frontier of reform and opening up. It is the first demonstration area of socialism with Chinese characteristics. We should make good use of the legislative power of the leading demonstration areas, boldly go ahead and try first, further integrate with the international community and rush to the forefront of the reform of the capital market system.

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