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News III: Private offered fund part from "barbarous growth"



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The 11th China Private Offered Fund Summit Forum co-sponsored by Shenzhen Private Offered Fund Association and Simuwang was held in Shenzhen from March 16 to 18. This forum has attracted financial personage from more than a thousand of institutions of private placement, bank, trust, broker and futures. In the past 13 years, domestic private offered fund has grown rapidly on zero basis and stepped on the sunny road in the meantime of continuous conformance. The number of registered private offered fund managers in Shenzhen where financial industry develops actively has reached 1/5 of the whole country.

The scale of private offered fund has exceeded public offered funds.

Chinese resident has accumulated abundant fortune along with rapid development of domestic economy. According to statistics of consulting company in Boston, wealth management market in China shall keep a composite growth rate of over 15% from 2015 to 2020. Total individual available asset of Chinese resident is predicted to be RMB 200 trillion in 2020. Domestic private offered fund has developed fast as pulled by asset allocation. The past "wild child" has experienced adult ceremony.

The subscribing scale of private offered fund has reached RMB 10.24 trillion by the end of December 2016. This figure has exceeded the scale of the public offered fund of RMB 9.17 trillion in the same period, thus to open new chapter of domestic fund industry.

Enlarging scale forces industrial shuffling. Since private offered fund is registered for record in the end of February 2014, abundant shell private offered fund in the market have been cancelled. The scale of private offered fund is still keeping smooth and steady growth when private offered fund quantity in China shrinks continuously. As shown in the data, by the end of February 2017, there are 18,306 private managers registered in China Security Investment Fund Industry Association, 48,626 filed private offered funds, subscribed scale of RMB 16.35 trillion, paid in scale of RMB 8.55 trillion and 282,300 employees in private offered fund industry. Comparing with the end of 2015, the amount of managements of private offered fund is decreased by 26.79%, with the increase of 102% and 111% in the amount of private placement fund and paid-in scale respectively.

"By the end of February, the association has cancelled 12,834 private offered fund managers. The cancellation of abundant of shell institutions without practice ability has improved industry structure and remodeled industry image." said by Zhang Xiaoai, vice chairman of China Security Investment Fund Industry Association.

As pointed by Sun Dongsheng, chairman of Shenzhen Private Offered Fund Association, Chinese private offered fund has ushered a new booming period in 2016 and private offered fund has entered into a new era of supporting the excellent and limiting the inferior as well as standard and healthy development. Shenzhen as the most active region in private offered fund development has 1/5 of national registered private offered fund managers and fund management scale of over 1.5 trillion.

Tightened supervision promotes industry standard.

The compliance is even more important when private offered fund develops rapidly. The year of 2016 is considered as primary supervision era of the industry. Domestic private offered fund is parting from barbarous growth gradually.

Fund industry association has issued a series of new rules successively in 2016 to finish standardization, filing, collection, internal control and credit reply of private industry from the source. The supervision level is still establishing special management rule system of private offered fund 7+2 against private supervision frame, showing the determination of manager level in standardizing private offered industry.

As understood by the reporter, there are also problems of non-uniform industrial standard, multiple-layer nest, frequent interest arbitrage of channel business and connected transaction, ambiguity relation between asset management, shadow banking and private lending, good and bad intermingled in industrial institution, thus the legal system construction of private offered fund needs to be improved.

As revealed by superintendent of fund industry in recent days, two new supervision rules as Exposure Draft of Supervision and Administration Regulations of Private Offered Fund and Private Offered Fund Investment Method are predicted to issue in this year as the peak of legislation of private offered fund.

As revealed by Zhang Xiaoai, it shall focus on the policy of supporting superior and limiting inferior to enable mutual enhancing of private offered fund manager and intermediary service institution as lawyer and accountant through mutual gambling in the registration filing section. Introduce gambling between fund management institution and investors by virtue of guaranteeing right to know of investor through information disclosure system and fund contract in the stage of fund collection. Asset management institution shall give full play to pricing right and voting right of the buyer at the investment end to promote listed company guiding unlisted financial enterprises in continuous fundamentals optimization and core competitiveness promotion, forming gambling between buyer and seller of capital market.  

Provide entrepreneurial finance for middle and small size enterprise.

Strengthen supervision and policy support to build healthier and normative market environment for private offered fund industry. Private offered fund also supports the substantial economy in the meantime of development and growth. In current private offered fund structure in China, the scale of private stock right has reached RMB 4.89 trillion, while private scale of security is just RMB 2.8 trillion. As indicated by insiders, the equity investment demand provides fund for development of middle and small size enterprise.

As indicated by Sun Dongsheng, venture investment industry has become an important capital power for stimulating commercialization of research findings, playing important role in boosting structural reformation of supply side, accelerating development of new economy, cultivating new motion energy, pulling private investment and serving for substantial economy. Private offered institution in Shenzhen provides great support for financing development, industrial upgrading and technical innovation of middle and small size enterprise in the city even the whole country, playing active demonstration functions in guiding industrial development

"There are particularly more innovative and entrepreneurial enterprise in Shenzhen, cultivating dense atmosphere for entrepreneurship and innovation. Based on this, we specially set a mother fund of RMB 2 billion for investing in excellent angel institution, over 60% of which is invested in growth of medium small and micro-sized enterprise. As indicated by Liu Li, company director of Shenzhen Huitong Financial Holdings Investment Co., Ltd., "We also cooperate with colleges and universities at present and just establish an innovative and entrepreneurial talent fund to help the talent innovate and start funds for innovative and entrepreneurial talents, help talents' entrepreneurships and innovations and help the angel institution grow bigger and stronger."

Innovative enterprise is the most likely to gain favor of capital in equity investment field. As indicated by Cheng Houbo, president of Shenzhen Oriental Fortune Capital Company, the equity investment shall be implemented following the trend. As the state initiates "parting from virtual and entering into industry" now, we pay more attention to opportunities related to innovation drive and industry transformation and upgrading. The emerging industry of application of massive health and internet application and artificial intelligence shall show more trends of integration and interweave.