Private equity firms are only “three steps away” from becoming first-class investment institutions
2024-08-07
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On August 1, the "Private Securities Investment Fund Operation Guidelines", known as the "Investment Guide" of private securities funds in the industry, was officially implemented. This is another important supporting self-regulatory rule after the introduction of the first administrative regulations of the private equity fund industry in 2023. So far, the private equity regulatory system with the framework of "laws and regulations-departmental regulations-self-regulatory rules" has been initially completed, laying a solid foundation for the industry to reach a new level of high-quality development.In order to enable private equity funds to better play their functions and effectively prevent and resolve industry risks, the "Private Investment Fund Supervision and Administration Regulations" were officially released in 2023, which supplemented the missing links in the private equity fund supervision sequence and provided a basis for regulating private equity funds at the administrative and regulatory level. In 2024, the new "National Nine Articles" clearly stated that "concentrated rectification of prominent risks and hidden dangers in the private equity fund field" and "formulation of private equity securities fund operation rules". Immediately afterwards, new private equity regulations were introduced one after another. The regulatory authorities continued to improve the rule system from multiple aspects such as private equity fund fundraising, investment operations, information disclosure, and programmed trading, and promoted the development of private equity fund business activities in a more legal, standardized, and professional direction.The most intuitive change is that many entities, including private equity fund managers, private equity fund custodians, and private equity fund service institutions, have carried out a series of work around the new private equity regulations, and have vigorously implemented them in terms of standardizing investment operations, fulfilling the responsibility of safely keeping fund assets, and removing irregular performance displays. The private equity industry has entered a new stage of rectification and source cleanup, and risky and bad institutions are also accelerating their clearance. According to statistics from the official website of the China Securities Association, as of August 6, the number of private equity institutions that have registered and cancelled this year has reached 1,150, and 170 private equity institutions have been cancelled on August 2 alone, and an industry ecology of "orderly entry and exit" has gradually formed.The author believes that in the context of regulatory authorities promoting the standardized operation of private equity funds throughout the entire process, unblocking all links of "fund raising, investment, management and exit", and promoting the high-quality development of the industry to a new level, private equity institutions can seek development in three steps, forge strength that matches the high-quality development of the industry, strive to build first-class investment institutions, and provide strong support for China's modernization and the construction of a financial power.The first step is to recognize your own position and play your role. Building a financial powerhouse requires a strong economic foundation and a series of key core financial elements, including strong financial institutions. Private equity institutions need to recognize their position in the capital market, put functionality first, better serve national strategies and residents' needs for a better life, and practice the responsibility of professional investors with practical actions.The second step is to adhere to the principle of stability and compliance. Private equity institutions need to attach importance to legal and compliant operations, regulate their own behavior with higher standards, improve the construction of internal control systems, enhance risk management capabilities, and ensure that all operations comply with laws, regulations and industry ethical standards, so as to make positive contributions to the long-term stable and healthy development of the capital market.The third step is to strengthen investment research capabilities and improve service levels. As the private equity industry's trend of supporting the best and limiting the worst escalates, internal competition will also intensify, and private equity institutions need to practice internal skills for development. On the one hand, explore diversified development paths, strengthen the construction of core investment research capabilities, expand the professional talent team, and improve the scientificity and professionalism of investment decisions; on the other hand, continue to improve product innovation and service levels, optimize brand building, information disclosure and other links, and strive to create long-term sustainable value for investors. While enhancing investors' confidence and trust in the industry, attract more investors, especially medium- and long-term funds, to participate in the market, and ultimately form a virtuous cycle of "strengthening investment research capabilities - improving investment experience - increasing management scale" and sustainable development of private equity institutions.The direction is clear, and the key lies in action. The "roadmap" for high-quality development of the private equity fund industry has been set, and the path for private equity institutions to build first-class investment institutions by strengthening their hard-core strength has also become clearer. We expect them to do a good job as direct financing service providers, social wealth managers and market stability maintainers through the "three steps" of more effective function performance, more sound compliance risk control and more stable business philosophy.Image | ZCOOL
Production | Zhang Wenling
