General

China's private equity funds are actively exploring international trade business! In 2022, the equity market in China will continue to fluctuate, and the pressure on private equity institutions will increase sharply. In this context, the vision of 10 billion private placement is not limited to the mainland market. At the beginning of 2023, private equity institutions have disclosed the news that they are going to develop in the offshore market. It is reported that going overseas can set up new investment and financing platforms, connect with overseas institutions and individual investors, greatly expand investment horizons, attract international talents, and open up new development space for enterprises in international trade.

"Talent reserve, professional knowledge accumulation and international perspective will support Chinese investment institutions to go abroad, find investment opportunities and targets in the world, and realize global asset allocation," said Zhang Yongji, deputy director of the Professional Degree Center of the School of Management and Economics of Beijing University of Technology.

China's private equity funds are actively exploring international trade business! It is understood that Singapore is one of the preferred destinations for private equity funds to go to sea. In recent years, there are many family offices in Singapore, which is convenient for private equity funds. In Zhang Yongji's view, Singapore is very favored by private placement because compared with other places, Singapore's "geographical location and social culture are more suitable for mainland investors, and the local financial policy is very friendly to investment institutions".

In addition, Hong Kong, China is also one of the preferred destinations for private equity fund companies to go to sea due to its superior geographical location, complete financial and regulatory infrastructure, and international language. The national plan also supports Hong Kong, China to strengthen the function of the international asset management center. Moreover, Hong Kong, China also has certain advantages in the seamless connection between domestic and foreign financial centers. If the investment manager flies from Shenzhen to Singapore, the flight will take about 4 hours; It only takes about 20 minutes to take the high-speed rail from the Futian Central District of Shenzhen to the Kowloon Core District of Hong Kong. This distance advantage will also be reflected in the division of labor, communication and cost of domestic and foreign teams.

Since this year, the enthusiasm of the managers of securities private equity funds has increased greatly, because the market entities are optimistic about the structural investment opportunities in the A-share market throughout the year. According to the latest data of Private Placement Network, as of the middle of February 2023, the number of securities private placement products filed in the year was nearly 3200, of which 243 were filed by private placement managers of 10 billion yuan, accounting for 7.6%; 1817 private placements with a management scale of less than 500 million yuan, accounting for 56.8%; The rest of the registered products are from medium-sized private placement managers (500 million to 10 billion yuan).

China's private equity funds are actively exploring international trade business! Compared with the development of overseas mature markets, the domestic private equity market still has large room for improvement in fund operation, governance structure and system construction. With the deepening of financial reform, the rapid development of the private equity fund industry will also present some problems related to compliance and operation. Private equity funds still have a long way to go in terms of serving the real economy, preventing and controlling financial risks, and building resilient capital markets, such as fund managers. Due diligence of fund managers often focuses on performance and ignores operation. The industry ecology is not sound enough, and the road to marketization, legalization and internationalization is still long.

Ye Fang, head of Gefei Asset Fund Operation Department, said at the press conference of the White Paper on the Operation of Private Equity Investment Funds in China that overseas hedge funds have a long history of development and a large scale, and their growth rate of scale keeps pace with the intensity of supervision. This growth model is more convenient for third-party research institutions to conduct trend research and judgment, and better enable investors to understand the risks of fund operation and track performance.

However, the development of domestic private equity funds has some problems, such as rapid development, but the average scale needs to be improved, rich operation strategies, but the operation procedures need to be optimized, which leads to a certain gap between the efficiency and quality of domestic fund operation and the needs of investors.

Due to the complex international environment, China's private placement funds are also affected by various external factors. In Zhang Yongji's view, at present, there may be a risk of "changes in regulatory policies and unexpected situations in the fundamentals of investment objects" when China's private equity funds go to sea. The investors should take a prudent attitude, follow the policy guidance and continue to learn relevant experience.

China's private equity funds are actively exploring international trade business! Ye Fang believes that the future development of the fund industry should be transformed from three aspects: first, the manager and third-party research institutions should evaluate the operation maturity of the fund from the dimensions of compliance drive, process drive, technology drive and data drive; Second, the professional knowledge reserve and digital thinking building ability of fund operation talents need to be strengthened; Third, through the exploration of the collaborative mode between the manager and the third party institutions, and the digital construction, we will create an operation path suitable for the development of private equity funds in China.