The domestic private equity investment (PE) market experienced a "two days of ice and fire" in 2011: on the one hand, the fund-raising and investment activities in the market have increased significantly, setting a record high; on the other hand, the number of exits and the level of returns have begun to decline. Raise the alarm. "
Entering 2012, what opportunities and challenges will be ushered in the PE market that has accumulated over the years and is gradually getting better?
Industry analyst Fu Zhe said that from the perspective of industry supervision, fundraising, investment, management, and withdrawal, 2012 should be a life-and-death year for Chinese private equity investment institutions.
"Industry supervision has been strengthened, which has a greater impact on institutions in the market, especially local institutions." But Fu Zhe believes that this is a "double-edged sword". Institutions can take this opportunity to correct their own standard operation problems, and investment valuation will It continued to fall, the growth rate slowed down, and the exit methods were diversified. In addition, investment institutions will also pay more attention to long-term development planning and team culture construction to lay a solid foundation for long-term development.
Regulatory tightening has become a trend
From a management perspective, as the NDRC issued a series of documents on the standardized development of equity investment enterprises and held meetings to interpret the relevant regulations, the tightening of regulatory requirements and detailed work in the PE industry in 2012 have become an inevitable trend, and some of them provide for investment Institutions will have a greater impact.
For example, Fu Zhe said that the establishment of a “shell company†to circumvent the number of limited partners and lower the investment threshold for individual investors are common practices in the domestic private equity investment market in recent years. Work creates obstacles.
It is expected that this will force some investment institutions to begin to clean up their "original sin" and avoid such non-compliant operations in future operations.
At the same time, various regions will also begin to rectify the PE funds in the region. The number of registered PE funds in Tianjin has surged in recent years, but illegal operations such as illegal fundraising have also occurred. In this regard, the relevant local authorities are beginning to rectify and become the first region in China to begin to eliminate non-standard PE funds.
Since then, other regions have quietly started to find out the private equity investment funds in the region. According to the forecast, the investigation and rectification of the private equity investment fund in 2012 will be expanded nationwide.
Facing reshuffle PE preparation in advance
In the face of the changes in the PE market, many well-known and mature PE institutions have foresighted and prepared food in advance in 2011.
"Many large funds have been raised in place, and these funds will become an important bargaining chip in supporting these institutions through this round of industry reshuffle." CITIC Securities analyst Mr. Xiao admitted.
Fu Zhe believes that under the environment of intensified industry competition and a new round of reshuffle, institutions in the market still need to continue to raise funds to prepare for the "winter". However, as the central bank raised interest rates three times in 2011, raised the deposit reserve ratio six times, and liquidity tightened in the market, for new funds and small and medium-sized funds that could not be raised in 2011, the fundraising work in 2012 It will be very difficult.
Fu Zhe admitted that in 2012 the market will still actively raise funds, but due to the difficulty of raising funds, the number and amount of new fund growth will be slower than in 2011. At the same time, there will also be a situation in the market where the subsequent funds of the fund cannot be put in place, resulting in a "blue and yellow connection" and subsequent investment cannot be promoted.
It is expected that the investor structure of private equity investment funds will also change in 2012.
As the National Development and Reform Commission puts forward the investment threshold for qualified investors and the requirement to get through and calculate the total number of qualified investors, the proportion of funds from scattered wealthy families and individuals will be reduced. In contrast, institutional investors who can invest in large amounts, such as social security funds, government guidance funds, government-backed investment companies, insurance funds, and FOFs, will become the main targets of the fund.
In addition, in order to enhance its own competitiveness and open up new profit growth points, Fu Zhe expects that in 2012, more private equity investment institutions will begin to broaden fund types and business areas.
One of the highlights is private equity real estate funds. The funding gap of real estate companies provides good investment opportunities for private equity real estate investment funds. Such funds will increase significantly in 2012. At the same time, exploring investment opportunities in the secondary market will also become an important development strategy for some mature investment institutions. It is currently observed that the fundraising of secondary market funds has begun to accelerate during the year.
In addition, the diversified fund categories that deserve attention in 2012 include M & A funds, mezzanine funds, hedge funds, and fixed-income funds.
Investment direction conforms to policy trend
In terms of investment, PE institutions experienced increased investment valuations and increased IPO resistance in 2011. At the same time, they faced fundraising difficulties. Investment in 2012 will be more cautious, investment rhythm will also slow down, and investment in the market Valuation will drop significantly.
Fu Zhe admitted that from an industry perspective, the direction of institutional investment is closely related to the direction of policy. At present, the development of strategic emerging industries is steadily advancing, and investment in high-end equipment manufacturing, new energy vehicles, new generation information technology and other industries will continue to heat up in 2012; the country proposes to promote the development of the cultural industry, and investment in cultural and creative industries will follow the trend Agriculture has been receiving much attention, and capital has increased its focus on new agriculture. At the same time, the National Financial Work Conference proposed "encourage, guide, and regulate private capital to enter the financial services sector", which is also expected to drive investment in the financial industry to continue to rise.
In addition, in the context of frequent real estate regulation and control, and real estate companies urgently need to open up funding channels, private equity real estate investment will further accelerate. In contrast, the Internet and clean technology industries, which were highly popular with investment institutions in the first two years, will cool down in 2012.
The exit form will be diversified
Judging from the exits in the domestic private equity market in the past, IPO has always been the main exit method for PE institutions, and its investment return level is generally higher than other exit methods.
However, Ms. Liu of Ping An Securities said that from the current market environment, the domestic IPO review is getting tighter, the passing rate is lower, the secondary market continues to be weak, overseas Chinese stocks are repeatedly hit, and it is unclear when the listing window will reopen , IPO exit resistance is self-evident.
Faced with many changes, the concept of "IPO first" in the domestic private equity investment market in 2012 will change. PE fund management agencies approaching the exit period need to consider and balance, is it to choose to wait for the appropriate listing time, hoping to obtain a higher book return multiple after the company is listed? Or to consider the cost of time, choose "collect when you see good", and other ways Exit early, return investors' income, and guarantee a better internal rate of return.
"We believe that more funds will choose to exit through mergers and acquisitions and equity transfers during the year, and the exit activities in the domestic PE market will diversify." Fu Zhe said.
According to the data in 2011, there were 7 exits of mergers and acquisitions in the domestic private equity investment market, an increase of 250.0% compared with 2 in 2010, and 5 exits of equity transfers, which remained at the same level as in 2010.
Industry insiders predict that the number of such withdrawal cases will increase significantly in 2012.
Institutions strengthen soft power training
In addition to the growth of capital scale and the expansion of business areas, PE institutions have begun to pay more attention to the cultivation of their own soft power. The value-added services provided to enterprises after investment have become one of the core competitiveness of the organization.
It is expected that after the establishment of a full-time post-investment management team becomes a trend, the internal functions of the organization will be further refined, and more organizations will begin to establish full-time investor relationship management and research departments.
In addition, Fu Zhe said that with the increase in industry regulatory requirements, the information disclosure obligations that filed PE institutions need to perform increase, and investment in compliance will also increase.
But we have to face the fact that compared with foreign-funded institutions, local PEs start late. Many institutions are coping with the increasingly fierce market competition. On the one hand, they are still exploring their own development path and have not yet formed their own institutional culture.
Many local institutions that focus on long-term development in the market have realized the importance of the construction of the team culture of the organization, and have begun planning and implementation. 2012 may be a good time for organizations to practice "inner strength" and sort out their long-term development ideas.
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