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against the backdrop of a continued downward market, private equity funds worth tens of billions of dollars are also facing severe tests.

on the one hand, they are under pressure from declining net value, and on the other hand, the management scale of some private equity funds has shrunk seriously, resulting in a large-scale withdrawal from the "10 billion private equity club".

according to data from private equity ranking network, as of the end of august, there were 85 private equity firms with a total investment of over rmb 10 billion, a sharp decrease of 19 from the 104 at the beginning of this year, a decrease of 18%. in the past, each round of a-share adjustments eliminated a number of private equity firms with a total investment of over rmb 10 billion, which also highlights the cruelty of the private equity industry.

according to the securities times and china securities journal, the operating pressure of many private equity funds has also increased dramatically, and some institutions lamented that this year is the most difficult year. in the first eight months of this year, only 74 of the 235 products under the 10 billion private equity funds achieved positive returns, accounting for 31.49%.

the number of billion-dollar private equity clubs has dropped sharply

in the past few years, although the overall market performance has been poor, the quantitative industry has emerged as a new force, and a number of private equity firms have crossed the 10 billion mark, prompting a significant expansion of the 10 billion private equity club. in the first half of 2023, the number of private equity firms with a capital of 10 billion reached a peak of 115, but dropped to 104 at the end of last year.

since the beginning of this year, with the continuous adjustment of the market, the number of private equity funds with a total investment of over rmb 10 billion has further declined. according to data from private equity ranking network, as of the end of august, there were 85 private equity funds with a total investment of over rmb 10 billion, a sharp decrease of 19 from 104 at the beginning of this year, a decrease of 18%.

especially in the past two months, the number of private equity funds with assets worth over 10 billion yuan has changed dramatically. more than 10 private equity firms have collectively withdrawn from the 10 billion yuan private equity club, including jukuan investment, commander capital, kuanyuan asset, xiangju capital, shanghai dapu asset, qianxiang asset and other private equity firms.

among the 85 billion-yuan private equity funds, shanghai and beijing have the largest number of billion-yuan private equity funds, 40 and 21 respectively. according to investment model, there are 43 subjective billion-yuan private equity funds, 30 quantitative billion-yuan private equity funds, 11 hybrid billion-yuan private equity funds, and one billion-yuan private equity fund with an unknown investment model.

liu youhua, deputy director of the wealth research department of paipai.com, told the securities times and china securities journal that the decline in the number of private placements worth hundreds of billions of yuan is mainly due to the following reasons:

first, the a-share market continues to be sluggish, and private equity funds have poor profitability, which has led to a lack of investor confidence. in addition, under the new regulations, the filing requirements for private equity products have been raised, which will affect the issuance of new funds to a certain extent, and also lead to a reduction in the size of existing funds;

second, from a historical perspective, quantitative private equity has always been the main force behind the growth in the number of billion-dollar private equity funds. this year, the a-share market has seen a clear differentiation in style, coupled with stricter regulation of quantitative private equity funds, and the halo of quantitative investment protagonists that were once highly sought after by investors has disappeared. while the growth of quantitative private equity has slowed down, some billion-dollar quantitative private equity funds have shrunk in size due to poor performance. as a result, the number of billion-dollar quantitative private equity funds has decreased instead of increased.

only 30% of products have positive returns, and the pressure on private equity operations has increased dramatically

in the past, each round of a-share market decline eliminated many private equity funds with hundreds of billions of yuan, which also highlights the cruelty of the private equity industry. unlike public funds, private equity funds pursue absolute returns. if they fail to make money for several consecutive years, the pressure to survive will increase sharply. even private equity funds with hundreds of billions of yuan will not be able to escape the cycle and will eventually perish in the great waves.

according to securities times and china securities journal reporters, the operating pressure of many private equity funds has increased dramatically. this is especially true for subjective private equity funds. some private equity funds do not charge management fees because their net value is less than 1. if they do not make money for three consecutive years, they will naturally not receive performance commissions, but rent and personnel costs are mandatory expenses.

a private equity manager in shenzhen told reporters that the company has more than a dozen employees, and the cost of office rent and investment research personnel is more than 10 million yuan per year. the management fee of the product is 0.75%, which can only cover the cost. we have made money overall in the past few years, otherwise the pressure would be great. at present, private equity with a scale of less than 2 billion yuan generally feels the pressure of survival.

another institution lamented that this year was the most difficult year. since the private equity fund mainly issued products at high points, it not only failed to make money for three consecutive years, but most of its products also suffered heavy floating losses. the channel had long ago suspended management fees, and the fund was relying entirely on the company's early capital, otherwise it would have been disbanded long ago.

according to data from private equity ranking network, the return of the private equity fund index in august was -1.76%, and the return so far this year was -7.84%. among them, the stock strategy was difficult to make money. from january to august, the return of the stock strategy index fell to 11.39%, ranking last among the five major strategies.

among them, there are 235 products under private equity funds with a total value of over 10 billion yuan that have performance displays. the average return from january to august this year was -0.05%, the median was -4.86%, and 74 products achieved positive returns, accounting for 31.49%.

data from the china securities investment fund association shows that in terms of the size of existing funds, as of the end of july 2024, there were 150,543 existing private equity funds with a total size of 19.69 trillion yuan, a decrease of 1.13 trillion yuan from july last year, and the number of existing funds also decreased by 2,335.