A-share chess board of foreign private equity giants: 19 managers issue 53 products

 A-share chess board of foreign private equity giants: 19 managers issue 53 products

Data from the China Fund Association (hereinafter referred to as the China Foundation Association) show that up to now, 22 foreign-owned private equity fund managers have been registered by the Securities Fund Association. Among them, 19 foreign-funded private equity companies have filed 53 private offerings, and the assets management scale as of the end of August was about 6 billion yuan. Since this year, there have been six registrations of foreign private equity, the same as last year; the number of foreign private equity products has reached 28, more than last year.

Twenty-two foreign private equity firms are well-known and have become emerging A-share investment institutions in recent years. They act in a low-key and mysterious manner, but as a typical representative of smart capital, their actions have attracted a lot of attention.

According to the meaning and statistics of the China-Base Agreement, the term foreign private equity includes only the fund manager of solely foreign-owned private equity investment fund registered and filed after 30 June 2016.

As of September 23, six foreign private equity firms - Lianbo Huizhi, Anlian Weitong, Deshao, Nomura, Baling and Tengsheng - have been registered this year, which is the same as last years total. By contrast, there are six, nine and one foreign private equity registered in 2018, 2017 and 2016.

Among them, 9 are from the United States, accounting for 41% of the total 22. The others come from Switzerland, Singapore, Britain, Italy, Korea, Germany, Japan, Hong Kong, China and so on.

With the accelerated distribution of foreign private equity, the number of foreign private equity products filed in 2019 also reached 28, more than 20 in 2018. In 2018, 2017 and 2016, the number of foreign private placement products on record was 20, 5 and 0 respectively.

From the perspective of institutional management scale, there are 9 foreign private equity companies with management scale of 1-1 billion and 8 foreign private equity companies with management scale of less than 100 million. Among them, Yuansheng Investment Management, which was established in June 2018, has the largest scale. At present, there are six registered products, and the management scale is in the range of 20-5 billion.

Reporter inquiries found that the above 53 foreign private equity products, including bond funds, active management of stock funds, quantitative funds, FOF products and other different types of investment products.

In addition to the introduction of private equity funds, foreign private equity is also stepping up the layout of investment advisory business.

Although the number of foreign private placements entering China is still small, their parent companies are all gold-lettered signs overseas. For example, BlackRock, the worlds largest capital manager, Qiaoshui, the worlds largest hedge fund, Ingman, the worlds largest listed alternative asset management company, UBS, the largest financial holding group in Europe, Amben, the largest independent asset management institution in Europe, Yuansheng Capital, the worlds largest CTA company, Allianz Group, the largest insurance company in Europe...

Foreign capital is known as smart capital, so why does foreign private equity accelerate the distribution of A shares?

On August 7, Rui Dalio, co-chief investment officer of the founder of Bridge Water Fund, the worlds Top Hedge fund, said in a public speech, Now is a good time to enter China. China is pushing forward reform and opening up. It can choose early entry or late entry, but early entry is better. We have noticed that Chinese market stocks are being gradually incorporated into the MSCI index. In addition, we must pay more attention to the diversification of portfolio, which is why we should intervene in the Chinese market now.

Qiaoshui has already laid out the Chinese market. According to the information of China Foundation Association, Qiaoshui (China) Investment Management Co., Ltd. was established on March 7, 2016, filed on June 29, 2018, with a registered capital of 50 million yuan. The first domestic private equity fund of Qiaoshui Fund, Qiaoshui All-weather China Private Investment Fund No. 1, was filed with the Fund Industry Association on October 17, 2018.

TwoSigma, a quantification giant, is the latest foreign private placement filed by Tengsheng Investment Management (Shanghai) Co., Ltd., a wholly foreign-owned company in its territory.

Earlier, Lin Guofeng, head of TwoSigma Asia-Pacific Region and CEO of Hong Kong Branch, said that TwoSigma was willing to carry out business in China in the long run. First, we see the deepening of Chinas capital market and increasing investment opportunities; second, we also see the data of China, the whole ecosystem. It is also developing, so there is a good space for us to do research and technology development. Thirdly, regulators are increasingly welcoming companies from all over the world to help the development of the Chinese market. For these three reasons, we as a technology finance company must come to China.

The survey results of private placement network show that 82.35% of private placements think that the positive distribution of A shares by foreign private placement is only the normal asset allocation. The main reason for the acceleration of foreign private placement in China in recent years is the increase of the opening of Chinas capital market, which has nothing to do with the bottom of the market or the start of the bull market. There are also 17.65% of private equity said that foreign investment institutions are more rational, at this time, the overweight layout of the Chinese market is the charm of the low valuation of A shares.

Chinas capital market is further opening up, and the current valuation level of A shares is lower than that of international capital market. Therefore, foreign private equity has accelerated its entry into the Chinese market and carried out global asset allocation. On September 23, Chen Yang-yang, a researcher in private volleyball, said.

Performance challenges

The performance of foreign private equity is rarely reported. Data from investors in the industry show that in July 2018, BlackRock A shares completed the first phase of the fund-raising, the initial size of the fund-raising is 260 million yuan. Data show that the net value of warehouse construction on July 31 and August 2 was 0.9999 and 1.0019 respectively. As of Sept. 6, the net value of China Opportunity Phase I private offerings of BlackRock A shares was 1.13.

Hanya Investment China 1 was established on April 2, 2019, with a net value of 1.07 as of September 6.

In response, Chen Yangyang said, the biggest feature of foreign private placement performance is relatively stable, but the general income is not high, which is lower than the performance of domestic private placement in the same period. If it is ranked by income, it is roughly at the middle level.

Foreign private equity has both advantages and disadvantages when it comes to China. Foreign private equity has a deeper understanding of capital market, more experience in international market investment, and some brand advantages in head foreign private equity. However, there is a gradual process for foreign capital to grasp the policy and trading rules of A shares in the short term. Chen Yang-yang said.

A share of foreign private equity investment, to consumer white horse blue chips more. A private equity person said.

In the short run, foreign capital prefers white horse blue chips with high quality, large market value and obvious competitive advantages; in the long run, it will participate in all kinds of ways to represent the trend of consumption upgrading and industrial upgrading in China. Wang Yuanyuan said.

Source: Responsible Editor of Economic Report in the 21st Century: Ren Hui_NBJ9607