Interview With Zijin Investment Wanshun: In The Era Of Stock Optimization, To Be A Market-Oriented Guidance Fund Under The Policy Enabling

After a few years of rapid development, as the main force of private equity industry investment, the government guided funds are entering the stock optimization stage, making higher requirements for the fine management of funds and the improvement of operational efficiency.

According to the "special research report on government guided funds in 2020" recently released, by the end of June 2020, the scale of domestic government guided funds has exceeded 2.1 trillion yuan, and the total scale of master and sub fund groups is expected to be 9.4 trillion yuan. From 2012 to 2019, the total scale of the guidance fund itself will increase by about 2 trillion yuan, with a compound annual growth rate of 59.32%. However, compared with the establishment of government funds in 2018, the number of government guided funds has been further optimized.

At the same time, the "notice on strengthening the management of government investment funds and improving the efficiency of financial contributions" issued by the Ministry of finance at the beginning of the year clearly stipulates that budget constraints on the establishment of funds or capital injection will be strengthened, the efficiency of financial contributions will be improved, and the orderly operation of funds will be promoted.

In the stock optimization stage, how does the government guide the fund to deal with the challenges brought by the market-oriented management? Under the background of the homogeneity of GP strategy, how does the government guide the fund to select partners? How can the government guide the fund to deal with and provide help to the sub fund with difficulty in fund-raising and unsatisfactory investment progress?

Recently, Wan Shun, member of the Party committee and deputy general manager of Nanjing Zijin investment group, received an exclusive interview with the 21st century economic report during the summit of the 14th China investment annual conference · limited partners.

Enabling funds under the guidance of policies

21st century: now some market-oriented master funds are expanding the proportion of direct investment, and some even increase the proportion of direct investment to more than half. How can Nanjing innovation investment group match the master fund business with the direct investment business?

Wan Shun: Nanjing innovation investment group is a subsidiary of Zijin investment group. We have 5 billion yuan of self owned capital and entrusted to manage the guiding fund of Nanjing municipal government of about 15 billion yuan. The group sets up market-oriented sub funds through the guiding role of guiding funds, and also has a small number of direct investment business.

We still manage the government guidance fund mainly by investing in sub funds. It is mainly divided into two parts: one is the industrial fund with a scale of 10 billion yuan, and the other is the science and technology innovation fund with a scale of about 5 billion yuan. After investing in the sub fund, the total scale of the formed fund has been enlarged to more than 100 billion yuan.

In the direct investment business, we have invested in dozens of projects, and the return on investment is also very good. The advantages of direct investment lie in its fast speed, accurate investment and the realization of the overall strategic objectives of the government. However, direct investment also requires a certain allocation of personnel and resources. If the team is not so large, it is a better choice to set up a sub fund to give full play to the resources and management advantages of GP in society.

Therefore, at this stage, we still focus on the establishment of sub funds. In the later stage, with the expansion of the scale of management funds and team members, we may also appropriately increase the proportion of direct investment after mastering more resources.

21st century: between financial institutions and market-oriented institutions, is the market-oriented management of guiding funds facing challenges? How do you think of the impact of the "New Deal" on the investment activities of the guiding fund's performance evaluation, in addition to the investment appeal of the policy, but also the consideration of the specific market benefits?

Wan Shun: I think our guiding fund is not to do specific investment promotion and industrial system investment, but to do things that are helpful to investment promotion and industrial system from a more macro perspective. The most fundamental logic behind this is to help the industrial development through the operation of capital marketization, so that investment projects can easily come, and the industry will naturally be systematic.

Our operation philosophy is still the direction of marketization, which can not be separated from the other two: first, the overall industrial orientation and industrial layout of Nanjing. For example, Nanjing has eight industrial chains, and our sub fund and direct investment business are basically around the eight industrial chains.

Secondly, we need to attract other GP policies to attract the market. For example, angel funds are set up in Nanjing. The guiding fund can contribute up to 49% of the total investment. After the fund is implemented, there will be certain rewards, ranging from 300000 to 15million according to the scale of the fund.

In addition to cash incentives, we are relatively in the forefront of the country in terms of tax incentives, housing subsidies, talent policies and other aspects. We hope that through such policy empowerment, we can attract people to Nanjing to settle the fund, and the decision-making process of investment projects is market-oriented.

21st century: under the state-owned background, how can Nanjing innovation investment group achieve marketization in talent management mechanism?

Wan Shun: first of all, we have a relatively fair salary system with reference to the level of marketization. Second, we are building a follow-up mechanism. When investing in projects, people in the team should be forced to follow the investment, and other middle office and backstage personnel should voluntarily follow the investment, and take their own money to bind with the performance of the fund. When the investment return is good, we will be rewarded, and when it is not good, we will be given corresponding deduction and punishment.

Good GP can go beyond the normal examination and approval, and the re investment requirements should not be too rigid

Now, the development strategy of many industries in Nanjing is also determined. Under the background of homogeneity of GP strategy, how to select the partners?

Wan Shun: when we are all crowded in a big track, we need to concentrate on the research on the subdivided tracks and analyze which are scarce and which are surplus. This is a way to avoid homogenization.

For example, in the field of integrated circuits, we all know that foreign countries are "stuck in the neck", and China is vigorously developing, and the investment in integrated circuits is booming. However, after a detailed study, it will be found that some segments of the IC industry are about to face the situation of excess, and the investment may bring losses. Some subdivision areas really need long-term layout. We need to invest the fund in the really scarce subdivision areas, and there are few homogeneous tracks.

When selecting a specific GP, we have in-depth discussion and communication with them to understand what projects he has invested in before. At the same time, we will also judge the professional level of GP from a relatively professional perspective, and observe how his ability to identify the industry is. In addition to our own team needs to be professional, we will also use the power of experts in society to jointly judge GP.

21st century: with the continuous reshuffle of the industry, what is the new feeling in the process of screening GP and is it more efficient?

Wan Shun: at the beginning of fund craze, many people set up fund management companies to raise funds in the market. But over the years, we found that the difference between GP is quite large. Some funds invest fast and well with high returns. Some funds invest slowly, the projects are not so good, the follow-up management is slack, and it is difficult to withdraw.

Therefore, after a period of time, we can see which GP companies in the market are stable, reliable and have performance, and gradually move closer to the top GP. The relationship between LP and GP is more and more stable, which gradually forms a mature market.

21st century: in the past few years, Internet investment model innovation projects were relatively hot, and now investment in hard technology has become a new upsurge. If there are excellent GP teams emerging in the era of Internet model innovation, and now they are turning to invest in hard technology, how would you consider it?

Wan Shun: we will be very cautious, because the logic of the industry is different, and the specific way and elements of the project are also different. We need to carefully identify the team's ability to control professional knowledge and basic knowledge. If the GP team in transition really has the ability to look at hard technology, raise funds and manage investment, we will support it as well.

21st century: now many GP still find it difficult to raise funds, because although state-owned assets and government guided funds are willing to contribute, social capital is not easy to match. How to help GP solve the problem of fund-raising together?

Wan Shun: the Nanjing guidance fund is very good in terms of strategy, strategy and funding stability. For the current situation of GP's difficulty in fund-raising, first of all, we will comprehensively measure the ability of GP in all aspects. If the quality of other aspects of GP is excellent, even if the fund-raising ability is relatively weak, we will still invest in him, and help him find funds to complete the fund-raising as soon as possible.

Second, if you encounter a GP with very good performance, you can go beyond the normal approval. We set up a fund at the end of March last year, and we have invested 42 projects and 4 IPOs in one and a half years. Now they are going to do the second phase fund. We will hold two meetings at one meeting in order to support them to quickly set up the second phase fund. The better GP does, the more we can go beyond the norm.

Thirdly, I don't think that the requirement for the return investment of GP should not be too rigid. As a local guidance fund, we must first measure the growth ecology of enterprises bred by local governments. If the relevant ecology of the investment target is relatively well established, there is also the foundation to talk about the return investment with GP, so that the GP has a good space for application. When there is no confidence, we should be flexible, so that we can reach a consensus and move forward.

Clearing the sub fund is a normal operation rather than a moving one

"21st century": at present, some industry voices believe that the scale of the guidance fund cannot continue to be loose, and the financial contribution will be reduced. Has Nanjing innovation investment group encountered the corresponding situation? How do you think the existing funds should be operated?

Wan Shun: we haven't encountered such a situation for the time being. The municipal Party committee and the municipal government support innovation, science and technology innovation enterprises and growth-oriented enterprises with the help of guiding funds. As for supporting the development of industries in the eight major industrial chains, the layout is still very clear, the resources are relatively adequate, and the strategic determination is strong. So we are investing in a very orderly way, and the amount of money is increasing.

21st century: last year, a government guidance fund said that it was necessary to clean up sub funds. Did Nanjing innovation investment group take corresponding actions?

Wan Shun: in fact, we have been doing the work of cleaning up sub funds, but it is not a campaign cleaning up, but a normal operation and management. We will make different assessments at different stages, such as how to evaluate the initial stage and exit period. The key is to evaluate the investment period year by year. If some aspects fail to meet the requirements, we will remind GP. If it is done badly or violates a lot of regulations, we will even stop the investment of the fund.

21st century: if there are sub funds completed and the investment progress is good, but the demands of the government are not taken into account, how to deal with it?

Wan Shun: we still need to be practical and realistic. For example, our industrial fund requires double return investment, and the return investment progress should match the overall investment progress of the fund. If the progress of the reinvestment of a fund is obviously lagging behind the total investment amount, we will seriously communicate and communicate with each other to find out the reasons behind it, what is the plan behind the GP, and what adjustments are planned to be made.

Generally speaking, the common way to manage enterprises is "one enterprise, one policy". Now we call it "one sub fund and one policy". We will not let the fund stop immediately when it fails to reach the progress. We will still analyze the specific situation.

21st century: Recently, Nanjing innovation investment group set up a special fund around the "eight industrial chains", released information on the establishment of six special funds, including software and information services, new energy vehicles, new medicine and life health, integrated circuit, artificial intelligence, and intelligent equipment manufacturing, and openly recruited two special fund management institutions for smart grid and rail transit. These funds basically cover the hot industries in recent two years. These industries are capital intensive, and many projects are overvalued. How to evaluate the investment risk and return?

Wan Shun: we have three-dimensional considerations when we do the eight industry chain funds. We will make some structural arrangements to match the investment in the early stage, growth stage and M & a stage. As the guiding fund of our government, our focus is relatively ahead. For example, when the social funds are not very active, we should invest. In this way, we can layout some projects early in a forward-looking way, and at the same time, the valuation of the projects will not be too high.

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