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In the private equity venture capital market, funds that focus on the transfer of second-hand fund shares are called "S funds". S funds mainly purchase corporate equity or fund shares from investors, and related transactions are also called "S transactions". Recently, there has been a wave of local establishment of S funds. The latest case is Xiamen adopting the form of S parent funds in order to leverage more capital liquidity.

As a "buffer zone" for the exit of private equity venture capital funds, S funds are increasingly favored by local state-owned assets and guidance funds. A China Securities Journal reporter found that compared with the arbitrage purpose of "picking up leaks" at a discount in market-based S transactions, local governments set up S funds mostly to take over their previous funds in order to release liquidity from local finances, banks, etc.

However, S funds are not the ultimate goal of local exit. In the context of the blocked exit channels in the entire industry, there are still some problems to be solved for local governments to develop S funds, such as the valuation differences of transactions, the limitations of regional equity market operations, and the fact that S funds have not yet formed scale effects. (China Securities Journal)