In recent years, the rapid growth of government-guided funds has attracted more and more attention from investment institutions. Among them, there is no shortage of brokers private figure. Cooperation with the government guide fund has become one of the important directions of private placement transformation of many securities companies. Insiders said that the cooperation between private placement of brokerages and government guided funds is mutually beneficial and win-win. On the one hand, it can relieve the pressure of private placement of brokerages, and on the other hand, it can help push the government guided funds to better realize the optimal allocation of resources, promote the optimization and upgrading of industrial structure, and promote regional economic development.

Differentiated operation mode

Government guiding funds play an active role in driving industrial development, promoting the formation of innovative economy and optimizing industrial structure, providing opportunities for the development of emerging industries and high-quality enterprises. Data show that by the end of June 2018, 1,171 government guidance funds had been set up, with a total target size of 5.85 trillion yuan.

The government guiding fund has its particularity both in daily management and supervision. According to relevant professionals, government investors are more strict in their choice of fund managers. Investment performance, exit performance and professional investment ability are all important indicators to be considered.

In the field of private equity investment, big brokerages private subsidiary to differentiate operation mode in recent years, with a fund manager or as a form of cooperative organizations and state-owned capital, such as government guide fund to realize linkage, equity venture capital fund or direct equity investment, find more investment opportunities emerging industries and enterprises.

Take cicc, a wholly-owned private equity investment management subsidiary of cicc, for example. In 2017, cicc and henan investment group jointly launched the henan strategic emerging industry investment fund with a target scale of 30 billion yuan, of which henan investment group as the cornerstone investor subscribed 15 billion yuan. Through the parent-subsidiary fund model, the fund has been expanded to a scale of 100 billion yuan. According to the investment management system and standards of cicc, the fund conducts market-oriented investment through the combination of parent fund and direct investment.

Public information shows that by March 2019, henan strategic emerging industry investment fund had invested in eight sub-funds, including energy conservation and environmental protection, information technology, consumption upgrading, science and technology, finance, health care and other industries. Among them, it has directly invested in 7 high-quality enterprises, such as xiaopeng automobile, baiorchards, cologne new energy and zhongzhi software, and indirectly invested in 57 companies inside and outside the country. According to relevant statistics, the fund has driven the landing industry and project investment scale of 10 billion yuan.

For example guosen securities subsidiary wholly owned private equity fund guosen hong sheng, its positive guiding fund, industrial group with the government, listed companies, financial institutions, social capital, such as depth of cooperation, jointly set up and manage a range of investment funds, PE investment, industrial investment, mergers and acquisitions investment, project investment, exchangeable bonds, 'investment, and other fields, to gradually build a diversified, multi-level system of investment business.

More market

Hit the institute recently released "2019 Chinese brokerages private report" (hereinafter referred to as "report"), points out that in 2018, down by the secondary market valuations, a-share market IPO audit more and more strict, the new three board and mergers and acquisitions multiple factors such as the downturn, as well as the disposal of financial investment income decrease and the new financial tools standards implementation effect, brokerage, private subsidiary net facing larger test. In this regard, brokerage private placement subsidiaries can actively strengthen the cooperation with the government guide fund, in order to reduce the impact of limited bank capital on the size of fund raising, and constantly broaden the channels for raising capital.

Fund management companies or management teams are one of the key factors for the government to guide the operation of funds. Minsheng securities believes that in the early stage of the establishment of the government guiding fund, priority can be given to cooperation with market-oriented fund operation institutions with a certain capital scale and risk bearing capacity. The government can increase support to relevant industries, formulate preferential policies conducive to the development of the industry, attract, develop and cultivate a number of institutional investors, and encourage various financial institutions and large and medium-sized enterprises to participate in the establishment of mutual funds.

According to the report, private equity subsidiaries of securities companies can effectively play the group's resource advantages. Relying on the strong research team of the parent company of securities companies, they are highly professional and have strong investment research ability. Many years of working experience and various project channels and networks of the securities firm's parent company give the securities firm's private placement subsidiary the advantage of first mover since its establishment. IPO withdrawal is also the strong point of securities firm's private placement subsidiary. At the same time, the mature risk control system of private equity subsidiaries of securities companies is more conducive to gaining the favor of institutional investors.

Industry insiders say the introduction of a more market-oriented and professional private placement force by the government can provide new drivers for local industry development and economic transformation. In addition, differentiated performance evaluation indicators and methods should also be used to introduce third-party evaluation institutions to objectively and impartially evaluate the operation performance of guiding funds. At the same time, more targeted incentive and restraint measures should be taken to improve the operation efficiency of government guidance funds, achieve the expected goals and achieve mutual benefit and win-win results.

Source: China securities journal