25 wholly foreign-owned private placements, the influx of foreign capital at the right time
On September 20, 2019, the quantification giant twosigma announced that its wholly foreign-owned company, Tengsheng Investment Management (Shanghai) Co., Ltd., has been registered as a private fund manager in China Securities Investment Fund Association. This is the 25th foreign-funded private equity fund manager to be put on record. Up to now, six wholly foreign-owned private placements have been registered and established in China Foundation association this year.
The following is information about all 25 wholly foreign-owned private equity funds:
In recent years, Chinas capital market is continuously opening up for foreign capital.
In June 2016, China Securities Regulatory Commission (CSRC) said that qualified wholly foreign-owned enterprises and joint ventures are allowed to apply for registration as private securities fund management institutions and carry out private securities fund management business including securities trading in secondary market in China. Since then, the association has issued the instructions for filling in the registration and filing of managers of wholly foreign-owned and joint venture private equity securities investment funds, which has opened the prelude to the registration of foreign private equity. In that year alone, 10 foreign private equity funds were registered successively.
On October 11, 2019, China Securities Regulatory Commission (CSRC) formally defined the time point for securities companies, funds and futures to cancel the restrictions on foreign shares, and adopted three-step strategy: on January 1, 2020, the restrictions on foreign shares of futures companies will be cancelled; on April 1, 2020, the restrictions on foreign shares of fund management companies will be cancelled; on December 1, 2020, the restrictions on foreign shares of securities companies will be cancelled.
Now, the opening up of the private to public transfer of foreign-funded private funds undoubtedly reflects the further inclusion and development of foreign capital in Chinas capital market. Previously, the industry expected that foreign private equity private to public is expected to officially land in 2021, according to which, the opening speed of private to public is much faster than expected.
Most foreign private placements hold a wait-and-see attitude: accumulation is more important than transformation
At present, the response of foreign-funded private placement to the policy of private to public is different. For the institutions that have been arranged in advance, the accelerated implementation of the policy is bound to be good news, while a large number of institutions are still holding a wait-and-see attitude.
Fidelity Letai investment is one of the institutions that have arranged private to public transfer in advance. It is reported that the company began to plan public offering business after this year. Fidelity plans to suspend the issuance of more private products, and will upgrade the company according to the standards of public offering. The company also specially screened outsourcing service providers before.
Fidelity International is an overseas well-known asset management company. Founded in 1969, it was originally the International Investment Department of Fidelity Investment in the United States. In 1980, it became independent from Fidelity Investment. The company currently manages more than $400 billion in customer assets. In January 2017, Fidelity Internationals wholly foreign-owned enterprises obtained the qualification of Chinas private equity business, becoming the first foreign capital management company to obtain the qualification. So far, four securities private equity products have been registered and issued.
On the contrary, a certain number of institutions hold a wait-and-see attitude. Relevant people say that it is more critical to make product performance better than private to public transfer. At present, the accumulation in China is still on the way.
In the fourth series of special research on asset management industry of CITIC Securities: the development status and characteristics of wfoepfm, the competitiveness of wfoepfm is analyzed as follows: 1) in terms of investment and research ability, the advantage of foreign private placement lies in its strong investment and research ability and rich investment experience in international capital market, and the institutions with historical investment and research experience and historical performance in domestic market are obviously dominant; 2) in terms of investment and research ability, the competitiveness of wfoepfm is analyzed as follows: In terms of sales capacity, foreign private equity generally has brand advantages, and the core in the future is to deeply cultivate channels and customers; 3) the risk control and compliance system of foreign private equity is usually relatively perfect; 4) in terms of product research and development, it still needs to adapt to the absolute income preference of domestic investors.
It can be seen that for foreign-funded private placement, the differences between domestic market and foreign market need to be adapted, sales channels and customers need to be expanded, and in product research and development, compared with the foreign relative income approach, the domestic absolute income approach also needs to be studied. The above accumulation is essential before private to public transfer.
Private to public situation in China
Private to public transfer is not a new thing for domestic institutions. Including Pengyang fund, Kaishi fund, Bodao fund, Hony distance fund, Zhuque fund and Tongtai fund, six private funds in China have been successfully converted into public offering.
However, the road to conversion is not smooth.
First of all, from the perspective of management scale, in addition to Pengyang funds management scale exceeding 10 billion, the management scale of other institutions is not large, and the total product scale of Hony distance fund, Tongtai fund and Zhuque fund is less than 1 billion. Take Zhuque fund as an example. Before it was transferred to the public, its private fund management scale was 10 billion. Product line R & D laying, personnel management and recruitment, rules to adapt to public funds (such as positions, shareholding ratio, withdrawal, etc.), and so on, all these necessary steps after the transfer need a lot of human and material resources to prepare.
Therefore, although after the transformation into public offering, it can access to a larger market and have more development opportunities, this process undoubtedly needs great efforts and hard experience.
In addition, it is not easy for a private fund to apply for a public offering license. Zhuque fund has been waiting for a long time for two years, while Chongyang investment, which is also an old private placement, chose to give up in April 2017. At present, a large number of institutions are still waiting for the approval of the CSRC.
Source: responsible editor of securities company in China: Ren Hui ufe63 nbj9607