The Listing Channel Of Venture Capital Companies May Break Through, And The "De Real To Virtual" Is Still The Red Line Of Strict Control

The listing of private equity funds has been raised again.

On January 8, the local financial supervision bureau of Shenzhen issued the draft of several measures to promote the sustained and high-quality development of equity investment in Shenzhen (Draft for comments), and openly solicited opinions from the public. In addition to a series of measures to promote the "raising, investment, management and retirement", the draft also proposes "exploring the listing system arrangement of excellent equity investment management institutions".

In fact, this is not the only wind direction.

"In the second half of last year, regulators were also exploring the possibility of listing asset management institutions." Close to the regulatory level of private equity sources told reporters.

"Since the CSRC stopped listing private equity investment institutions on the new third board at the end of 2015, the listing of PE / VC has not been mentioned again for many years. Although this is not the voice of the SFC system, it also represents the softening of the regulatory attitude towards this issue. But now we only have a clear direction. How to solve the problems in PE / VC listing, including the letter paper, still needs the answer from the CSRC. " Beijing area private equity fund related responsible person said.

According to the reporter of 21st century economic report, the investigation results of star PE Jiuding group, which was registered and investigated by China Securities Regulatory Commission, is expected to be released in the near future. Combined with the "Several Provisions on strengthening the supervision of private investment funds" just released by the CSRC, after further standardizing the private equity industry and determining the nature of the old cases in the industry, the listing of private equity funds may be ushering in a new beginning.

The listing of private equity funds has been raised again. Visual China

The pioneers

The story of private equity institutions linking China's capital market has a long history.

On April 29, 2014, Jiuding Group officially listed on the new third board, which is also the first attempt of domestic private fund management institutions to "personally" link the capital market.

At the same time, as the pioneer of PE in the new third board, Jiuding group also initiated the method of converting shares held by Fund LP into equity when listing. The company announced the fixed increase plan before listing, proposing to issue 5.798 million shares to 138 shareholders at the price of 610 yuan per share. Most of the fixed increase objects are the past LP of funds managed by Jiuding group. These LPS are estimated to be a basic value based on the fund shares held by them, and then replaced with shares of Jiuding group. This approach allows Jiuding to raise 3.537 billion yuan in the first round of the new third board.

"For the LP with cash out demand, replacement for equity is more suitable for exit. For private institutions, converting existing limited partners into shareholders can rapidly expand the balance sheet. At that time, almost no one questioned whether the LP conversion was reasonable The person in charge of the above-mentioned private equity funds recalled.

A person in charge of an investment bank of a small and medium-sized securities firm in China pointed out that the transfer of LP shares also means that some projects that may fail in investment and can not be withdrawn will be injected into listed companies through LP equity transfer, and the risks will be transferred to investors in the secondary market. "The valuation of private institutions is also very high in this process, and the personal wealth of the actual controller has skyrocketed. At that time, we estimated that the valuation of Jiuding was almost equal to that of Blackstone fund."

Just after listing, the first round of financing won 3.537 billion yuan, Jiuding group quickly opened the second round of financing of 2.2 billion yuan in 2014. The financing was purchased by the subscribers in cash, which set the highest record of fixed increase fund-raising on the new third board at that time. At the beginning of November 2015, Jiuding group announced once again that it had completed a financing with a total scale of 10 billion, becoming one of the enterprises with the largest accumulated financing amount in the history of the new third board.

And a series of capital operation of Jiuding also inspired the industry, and private equity institutions such as China science investment promotion, Silicon Valley paradise, xinzhongli and other private equity institutions all came to the new third board. According to the data disclosed by the national stock transfer system in 2015, the new third board completed the financing of 121.6 billion yuan in the whole year, while the financing of a number of private institutions including Jiuding investment and China science investment promotion exceeded 30 billion yuan.

However, judging from the actions of various institutions after raising funds, it seems that only a small amount of funds actually flowed into the real economy.

After obtaining huge amount of financing, Jiuding group successively obtained the license of mutual fund and securities company. During the peak period, Jiuding group also owned subsidiaries such as Jiuxin asset, Zoje insurance broker, JiuHeng Jinfu, daibao, etc., gradually building a full license financial control territory. In 2015, the company also changed its name to Jiuding investment by acquiring the listed company Zhongjiang real estate to realize the curve listing.

Another representative private equity firm, China Science and technology investment promotion, after obtaining the public fund license, chose to make a large-scale bottom copy after the stock market fluctuated violently, and many listed companies with dispersed equity and small market value were selected. After the fierce financing of 10 billion yuan, it has become a financial group with diversified investment business.

"In the new third board market, private equity institutions use the capital market to increase leverage to raise funds frequently, and finally use the money to do financial business. This is contrary to the requirement of" turning from the virtual to the real ", which also attracts the attention of the follow-up supervision." Zehao investment partner Cao Gang pointed out.

At the end of 2015, China Securities Regulatory Commission announced the suspension of listing and financing of private fund management institutions on the new third board, and investigated the use of early financing. In the follow-up, with the rectification of listed private institutions by the stock transfer system and the tightening of the regulatory policy on the financial holding group, the once brilliant new third board listing and private placement also fell through the ground. Among them, Zhongke investment promotion was delisted from the stock transfer company due to non-compliance of rectification, while Jiuding group was investigated by the CSRC for suspected violation of securities laws and regulations after selling part of its assets.

The wind direction of listing may be changing

Jiuding and other private equity companies have brought far-reaching influence, so that the regulatory authorities did not mention the issue of private equity fund listing again in the following years. Until this time, Shenzhen Monetary Authority issued a paper to explore the listing system arrangement of excellent equity investment management institutions.

"In fact, as far as I know, in the second half of last year, the regulatory authorities were also exploring the possibility of listing asset management institutions." A private equity source close to regulation said.

Regarding the necessity of listing the private equity fund industry, Ni ZEWANG, chairman of Shenzhen Venture Capital, once said that private equity fund is a cyclical industry, and the funds raised by listing can be used as the long-term core capital of GP to drive more LP funds, which helps to form long-term capital and activate the liquidity of the capital market.

According to the reporter of the 21st century economic report, the CSRC's investigation results on Jiuding group will also be released in the near future.

"After Jiuding's violation of laws and regulations is determined, how to regulate the private equity institutions in the future will become targeted. In line with the documents of the Shenzhen monetary authority, the regulatory authorities may further issue detailed rules to solve the problem of opaque use of private equity institutions in fund-raising, and open up the listing channel. " There are senior investment banks in Beijing said.

It is worth mentioning that on January 8, China Securities Regulatory Commission issued some regulations on strengthening the supervision of private investment funds, which further strengthened the supervision of private funds and severely cracked down on all kinds of illegal activities.

Specifically, in addition to the requirements for the classification of private fund names for the first time, the new regulations also explicitly prohibit a series of illegal behaviors such as lending, guarantee, public shares and real debt, capital pool business, self financing and so on.

"By issuing new rules and regulations, solving old cases, and connecting a series of events, the attitude of the regulatory authorities towards the listing of venture capital may be really changing." The senior investment bankers also said that although the regulatory authorities have softened their attitude towards the listing of private equity institutions, the red line that can not be touched is to shift the raised funds from real to virtual. "One is the use of the raised funds and the other is the requirement of refinancing, both of which need to be further clarified."

In the view of the heads of the above-mentioned small and medium-sized securities investment banks, how to balance the characteristics of information disclosure and private equity funds under the future registration system is still the focus of supervision.

"In the past, Jiuding people have raised funds to lay out P2P and even speculate in the secondary market, which is undoubtedly inconsistent with the national policy of supporting the innovation and entrepreneurship real economy. It is necessary to focus their main business on investment in the real economy through information disclosure or supervision. However, as private equity institutions that manage other people's funds, it is difficult to explain clearly the whereabouts of each fund directly through information disclosure, and how to deal with the insider sensitive information involving equity investment, which needs further balance and clarification. " The person in charge said.

In addition, Wang Chenguang, managing director of Pacific Securities Investment Banking Department, proposed that from the previous cases of PE Institutions Participating in the equity investment of listed companies, the listing of private equity institutions in the future will also face the problem of identifying the actual controller. "Many venture capital companies adopt the partnership system, or the equity structure is more complex, resulting in multi-level nesting. The identification of the company's actual controller and the stability of control right are also the focus of regulatory attention. "

The above-mentioned person in charge of private equity funds in Beijing pointed out that the Shenzhen monetary authority proposed to explore the listing of "excellent" equity investment management institutions, "not to mention how to define" excellent ". At present, only institutions with a certain business scale and small performance fluctuation can hope to be listed, and the number of ultimately listed companies will not be too many."

"From the chaos of private equity institutions listed on the new third board to the promotion of listing now, the regulatory reform can not be achieved overnight. However, in the context of the full implementation of the registration system and the further standardization of private fund management, the direction and thinking of the regulatory authorities may be changing. " The senior investment banks in Beijing said.

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