As a new track with a potential market size of one trillion yuan, public offering REITs also brings new opportunities for the development of securities companies and other institutions. Chinese reporters of securities companies have learned that at present, many institutions have made efforts to lay out public offering REITs, and talents and projects have become the focus of competition.
There is sufficient space for the development of infrastructure public REITs in China. According to statistics, from 2003 to 2017 alone, Chinas accumulated infrastructure investment scale was as high as 108 trillion yuan. Considering a certain depreciation rate, the scale of REITs converted into REITs is expected to reach trillion level even if calculated by 1% securitization ratio.
Xu Xianping, chairman of the 2020 China REITs forum and counsellor of the State Council, said that the potential scale of Chinas standard public offering REITs products should be between 5 trillion yuan and 14 trillion yuan, which could leverage three times the investment of 15 trillion yuan to 42 trillion yuan.
A trillion scale product will obviously change the market. In addition to the high-income securities investors of Debang and other securities companies, they are also important investors in Chinas securities market. Through public REITs, social funds are guided to invest in infrastructure projects with stable income, which can meet the demand of some social capital for stable cash dividend income and asset allocation with low risk fluctuation.
In terms of the allocation of residents assets, public REITs are expected to bring unprecedented changes. Deng Guoshan believes that China has entered the era of big asset management, but the industrys inclusiveness and transparency need to be further improved. Key problems still exist, such as maturity mismatch, mismatch of risk return, mismatch of supply and demand structure, and lack of gold content in product homogenization.
He said that on the one hand, social security funds, pensions, enterprise annuities / occupational annuities, as well as a large number of insurance funds and financing funds for the purpose of pension, urgently need diversified, decentralized and long-term stable configurable assets to meet their security and return requirements. Infrastructure REITs projects are widely distributed in regions and industries. The cash flow obtained through the continuous operation and management of infrastructure projects is relatively stable and can be expected to be sustainable. It provides medium and long-term allocation assets with stable returns and value-added expectations across regions, industries and industries.
On the other hand, the continuous accumulation of Chinese residents wealth has produced a rigid demand for asset allocation. However, the market still lacks stable channels and opportunities for asset allocation. Public offering REITs can effectively fill the gap of financial products, provide investment products with symmetrical risk return, good liquidity and high transparency to the market, and provide convenient direct channels for public investors to participate in infrastructure and real estate market investment; public REITs can improve the deposit conversion investment mechanism to meet the huge demand for equity financing and residents wealth at the asset end of infrastructure At the end of the huge investment allocation demand smart match, so that all people share the fruits of economic development.
With the official launch of domestic public offering REITs pilot work, the market stock of public offering REITs will continue to increase, and the variety of products will also continue to enrich. In the future, more and more wealth management institutions and individual investors will participate in the issuance and investment of public REITs products, which will further enrich the diversity of asset allocation in Chinas capital market, and disperse residents financial management and investment Investment risk of wealth management. Said the person in charge of deppon securities.
Securities companies strive for the first opportunity
There is no need to say much about the importance of public REITs. For a new variety, whoever runs fast and runs stably will have a better chance to stand out. A relevant person from a large securities firm in Shanghai told the securities times that its institution had already been carrying out the talent reserve of public offering REITs, and the project reserve was also continuously promoted.
Chinese reporters of securities companies have learned that recently, securities companies are scrambling to recruit positions such as contracting and contracting for public REITs projects. ABS business personnel of a securities firm said that recently, they have received several headhunting consultants invitation.
In fact, many small and medium-sized securities companies do not hide their ambition for the public offering REITs business. On the companys distribution of its, Deng guocang said.
And deppon securities, which has successfully broken through ABS business before, is also striving to be the first in the layout of public REITs. Deppon securities and its deppon fund are actively preparing for the qualification of public offering REITs. In order to better promote the business of public offering REITs, the two companies have established a joint promotion group of public offering REITs.
In the competition for reserves, various institutions have spared no effort, and most of the potential high-quality projects have entered the target list of securities companies.
For potential public REITs projects, deppon securities has also made a systematic review. Based on the past REITs and ABS business experience, the deppon securities public offering REITs project team has comprehensively sorted out the reserve list of leading enterprises of various asset types, focusing on logistics and warehousing, toll roads, sewage and solid waste treatment and other industries, and actively contacted with relevant leading enterprises to help sort out potential projects, and prepare pilot application materials for relevant public REITs projects.
Multiple challenges to be solved
As a new track, the development of public REITs is obviously faced with many uncertainties, and the internal and external challenges will make the pioneers feel pressure.
The first batch of pilot projects are facing challenges, and the mode evolution will affect the pattern. Deng Guoshan summed up the difficulties of securities companies in the layout of public offering REITs.
Therefore, from the perspective of the industry as a whole, it remains to be seen whether securities companies, as important financial institutions and core capital intermediaries, can seize the opportunity, identify their positioning, maintain strategic determination, be competent for basic roles, and seize the future REITs market highlands. Deng Guoshan said.
For the internal part of securities companies, Deng Guoshan believes that public offering REITs pose important challenges to securities companies in terms of accurate customer discovery and strategic cultivation, system resource docking and team optimization and integration, innovation exploration and investment research, platform integration efficiency and management, business thinking transformation, buyer seller interest balance, risk identification and prevention and control.
The relevant responsible person of deppon Securities believes that the internal challenges for securities companies to participate in public offering REITs mainly come from the establishment and good operation of inter departmental linkage and cooperation mechanism within securities companies. Due to the business attributes and product characteristics of public offering REITs, asset management, investment banking, wealth management, institutional sales and other business lines will be involved in the end of securities companies. How to establish a multi department collaborative linkage mechanism within securities companies, to achieve good cross departmental communication, close cooperation between multiple business lines, and effective supervision and incentive of post loan management are the main internal challenges for securities companies to participate in public offering REITs.
Three challenges for public REITs
The pilot projects of public offering REITs started from scratch, and the policy guidelines and rules gradually established a scientific and feasible institutional framework, which helped build roads and bridges for the successful launch of REITs pilot projects. Based on the market exchange and practice, Deng Guoshan believes that in addition to the pricing, tax burden, operation and management, secondary market liquidity and other issues commonly mentioned in the early stage, there are still three common challenges in the REITs pilot process, which are project qualification standard mechanism, state-owned assets transfer and leverage utilization.
First, the mechanism of project qualification specification. Deng Guoshan said that many infrastructure projects, such as the rate of return of ownership qualification certificates and so on, can not meet the requirement of beautiful women marry first. At present, local governments at all levels and sponsors of the first batch of sprint projects have made great efforts to promote escort and the coordination efficiency of special classes is high. However, it is uncertain whether the policy strength and popularity can be maintained in the future.
He suggested that, on the basis of the pilot project, the policy guarantee should be constructed by incorporating REITs into the index assessment of relevant government departments, transforming the special class coordination into a long-term mechanism, and incorporating it into the medium and long-term development plan.
Deng Guoshan suggested that in the initial stage of REITs pilot project, on the basis of case analysis and research, we should encourage the first trial, and in accordance with the spirit of the relevant documents of SASAC, the economic behavior should be compared with the IPO approval. Specifically, the public REITs funds and special purpose vehicles should be supervised according to the main body qualification of listed companies; the unit holders of public REITs funds should be supervised according to the shareholders qualification of listed companies; the economic behavior of the funds and special purpose vehicles involved in the public offering of REITs to acquire the subordinate target projects of state-owned enterprise promoters (as strategic investors of public REITs, i.e. compared with shareholders) are compared with listed companies The company and the state-owned shareholders to restructure assets to supervise. At the mature stage of the pilot project, it is suggested to introduce special policies to clearly regulate the state-owned assets transactions involved. In this way, we can give full play to the functions of game pricing and scientific pricing in the capital market, which is the embodiment of deepening the reform of market-oriented allocation of capital elements. We can improve the issuing efficiency of REITs of state-owned assets and reduce the related risks under the premise of safeguarding the rights and interests of state-owned shareholders, ensuring the preservation and appreciation of state-owned assets, and effectively preventing the loss of state-owned assets.
Third, leverage. At present, the restrictions on the use of leverage in the pilot policy have actually blocked the arrangement of issuing leverage and restricted the use of operating leverage after listing. On the one hand, in the cycle of low debt interest rate, moderate leverage can boost the issuance of REITs and the improvement of yield under the premise of ensuring the control of risks; on the other hand, it is difficult to release the outstanding liabilities of many projects, including the high proportion of stocks, collateral mortgage and pledge of project loans, difficult change of credit conditions due to the change of main body, and the need to clear the liabilities first in asset restructuring. Deng Guoshan suggested that when the first batch of pilot projects operated well, the restrictions on the use of leverage ratio should be relaxed by modifying the supporting policies, or ABS should be allowed to be structured and layered to achieve leverage effect with priority of ABS. Source of this article: Yang Bin, responsible editor of securities companies in China_ NF4368
Third, leverage. At present, the restrictions on the use of leverage in the pilot policy have actually blocked the arrangement of issuing leverage and restricted the use of operating leverage after listing. On the one hand, in the cycle of low debt interest rate, moderate leverage can boost the issuance of REITs and the improvement of yield under the premise of ensuring the control of risks; on the other hand, it is difficult to release the outstanding liabilities of many projects, including the high proportion of stocks, collateral mortgage and pledge of project loans, difficult change of credit conditions due to the change of main body, and the need to clear the liabilities first in asset restructuring.
Deng Guoshan suggested that when the first batch of pilot projects operated well, the restrictions on the use of leverage ratio should be relaxed by modifying the supporting policies, or ABS should be allowed to be structured and layered to achieve leverage effect with priority of ABS.