Under the new triangular cycle of “technology manufacturing finance (direct financing)”, private equity funds will act as the cornerstone of economic development. Focusing on the present and future, the new triangular cycle of “technology manufacturing finance (direct financing)” will replace the old triangular cycle of “real estate land finance finance (indirect financing)” in the past. As the core capital element of direct financing, private equity funds will play an important role in promoting the rejuvenation of the country through science and technology and the transformation and upgrading of manufacturing industry. Referring to the development history of private equity funds in the United States, we believe that China’s private equity fund industry will usher in a period of rapid growth under the catalysis of policies at all levels.
American private equity funds have started two periods of rapid growth under the catalysis of the admission of pensions and the establishment of NASDAQ small capital market. The entry of pension into the market provides abundant funds for the development of private equity funds and solves the problem of “fund-raising” in the industry; The establishment of NASDAQ small capital market has accelerated the listing process of start-ups, widened the exit channels of private equity investment, and solved the problem of “exit” in private equity fund investment. Under the two catalysis, the industry has started two periods of rapid growth.
China’s private equity investment industry is going through a similar process. The prosperity of the industry continues to rise under the catalysis of two rounds of fundraising and exit. On the fund-raising side, the standard for allocating private equity funds with insurance funds will continue to be liberalized, which will continue to provide increment for the raising of private equity funds. The rise of s fund will improve the investment liquidity and enhance the attraction of fund-raising; At the exit end, the establishment of Beijing stock exchange provides a new listing platform for specialized, special and innovative enterprises, and the exit channels of private equity funds are more unobstructed. We believe that China’s private equity industry is going through an early development process similar to that of the U.S. private equity industry. The double benefits of fund-raising and exit will continue to boost the prosperity of the industry.
According to our calculation, the asset management scale CAGR of China’s private equity funds will exceed 15% in the next decade and reach 56.2 trillion yuan in 2030. From the perspective of capital supply, insurance capital is facing the pressure of investment return rate, and its asset allocation proportion will be inclined to private equity fund investment, while bank wealth management and pension will continue to provide incremental funds; From the demand side of the project, China is in a critical period of industrial structure transformation. Scientific and technological innovation needs financial support from private equity funds. More than 10000 “specialized new little giants” enterprises will provide a steady stream of high-quality assets for private equity funds.
The industry head concentration continues to improve, and brand recognition is the core competitiveness of managers, which will continue to be strengthened in the future. In recent years, the private equity fund industry has been divided from 28 to 19. The high brand recognition of the head platform is its core competitive advantage, which promotes the continuous improvement of industry concentration. Head institutions with early market entry, strong investment strength and rich industrial resources have formed high brand recognition after continuous verification over time. With the blessing of this core advantage, the head platform has significant advantages in fund-raising difficulty, acquisition of high-quality projects and investment success rate. It will continue to promote the continuous improvement of industry concentration in the future.
Investment suggestion: recommend the head venture capital institution Sichuan Shuangma Cement Co.Ltd(000935) with high brand recognition and high-quality underlying assets and China Everbright Holdings. Sichuan Shuangma Cement Co.Ltd(000935) has the endorsement of the top investment team from IDG, and the underlying assets of the managed fund are concentrated in high boom advanced manufacturing tracks such as new energy and semiconductors. China Everbright Holdings is a leading cross-border private equity asset management institution in China, ranking fourth among pei300 Chinese institutions. Its excellent investment ability and rich industrial resources guide its scale to continue to grow. In the context of the continuous improvement of industry concentration, head institutions can better benefit from the rapid development of the private equity fund industry, and new development funds will bring incremental management fees to the company; In addition, the expansion of project exit channels will significantly reduce the difficulty of project exit, promote the rate of return on investment, and the performance reward and follow-up investment income are expected to bring more than expected profit growth.
Risk warning: the capital market fluctuates sharply; Policy promotion is less than expected; The calculation is subjective.
