Interface News Reporter | Dragon power
Interface News Editor | Song Yejun
"Rent, labor, marketing...... Every day, when I open my eyes, a large sum of money is gone, and at the same time, I have to worry about all kinds of trivial things such as employees, filings, fundraising, and reassuring customers. ”
Once thought that the future after smuggling was bright, Zhang Qiao never imagined that it would be so difficult to maintain the operation of a small private equity.
Especially in the past month or so, A-shares have continued to fall, the Shanghai Composite Index fell below 3,000 points again, and as of June 24, as many as 1,999 stocks fell below the low of 2,635 points on February 5.
In the context of the downturn, on the one hand, there are various new regulations in the private equity industry, all kinds of "bills" that have risen one after another, and on the other hand, there is a drawdown of net value that is difficult to repair.
There are a lot of new rules
As a private equity veteran who has been in the industry for nearly ten years, Li Zheng, the founder of a private equity in Guangzhou, never thought that he would be stumped in the product filing process.
"There are a lot of materials that need to be supplemented, even including employees' labor contracts, social security records, and company statements, etc., which is very time-consuming and labor-intensive to prepare." Li Zheng said.
In recent years, with the implementation of new regulations such as the Measures for the Registration and Filing of Private Investment Funds, the Guidelines for the Filing of Private Investment Funds and the Guidelines for the Operation of Private Securities Investment Funds, the Asset Management Association of China (hereinafter referred to as the "AMAC") has indeed become more and more stringent in its requirements for the filing of private equity managers and private placement products, which has undoubtedly increased a lot of workload for small and medium-sized private equity founders who need to worry about many things personally.
Zhang Qiao told Jian News reporter that the requirements of the new regulations are becoming more and more detailed and the threshold is getting higher and higher, which also means that private placements need to make more and more preparations when filing, and the time cycle will be longer than before.
Wang Qiang, the founder of a private equity in Shenzhen, believes that there are more and more requirements from AMAC in all aspects, in addition to the standardization of the industry is the general trend, or to a large extent related to the frequent occurrence of recent private equity explosions, especially the Hangzhou quantitative private equity run away in November last year and the Ruifengda run away in May this year, the impact is very bad.
A number of private equity people interviewed by Jiemian News also revealed to Jiemian News that affected by the turmoil of two private placements in half a year, AMAC has recently paid great attention to the nesting of private equity products and the investment situation of the New Third Board.
Among them, after AMAC updated the AMBERS system in May, it requires the submission of a "product structure chart" when filing products or changing product information in private placements, and requires private equity managers to issue a letter of commitment if the filing products involve multi-layer nesting. At the same time, a number of private placements involving the New Third Board products have been directly rejected recently.
It is difficult for old private placement filing products, and it is even more difficult for new private placement filing. According to data from the AMAC, as of June 24, only 20 private equity managers have completed the filing this year.
The tightening of private placement filing is only the "tip of the iceberg" in the process of industry standardization, and according to the incomplete combing of interface news reporters, the private equity industry has ushered in a number of blockbuster new regulations since 2023.
On March 24, 2023, AMAC issued the revised Measures for the Registration and Filing of Private Investment Funds; On July 9 of the same year, the State Council promulgated the Regulations on the Supervision and Administration of Private Investment Funds, which came into force on September 1. On December 8 of the same year, the China Securities Regulatory Commission (CSRC) solicited public comments on the Measures for the Supervision and Administration of Private Investment Funds (Consultation Draft); On December 15 of the same year, AMAC revised the self-discipline rules such as the Guidelines on the Content and Format of Asset Management Contracts for Collective Asset Management Plans, the Guidelines for the Content and Format of Asset Management Contracts for Single Asset Management Plans, and the Guidelines for the Content and Format of Risk Disclosure Statements for Asset Management Plans. On April 30, 2024, AMAC issued the Guidelines for the Operation of Private Securities Investment Funds.
Among them, new regulations on programmatic transactions are coming one after another.
On February 17, 2023, the Shanghai and Shenzhen Stock Exchanges simultaneously released the detailed rules for the real-time monitoring of abnormal trading of stocks on the main board of Shanghai and Shenzhen and the detailed rules for the real-time monitoring of abnormal trading of stocks on the Science and Technology Innovation Board. On September 1 of the same year, the China Securities Regulatory Commission (CSRC) guided the stock exchange to introduce a series of measures to strengthen the supervision of programmatic trading, and issued two notices, which were officially implemented on October 9; On May 15, 2024, the China Securities Regulatory Commission (CSRC) formulated and issued the Administrative Provisions on Programmatic Trading in the Securities Market (for Trial Implementation), which will be officially implemented from October 8. On June 7, 2024, the Exchange solicited public comments on the Implementation Rules for the Administration of Programmatic Trading (Consultation Draft).
Bai Ye, the founder of a quantitative private equity, said that every time a new regulation comes out, it takes time to study the new requirements and make corresponding changes, and this aspect alone will take a lot of his time and energy.
Qian Feng, a head private equity related person in Shanghai, also believes that with the development and growth of the private equity industry, it is the only way to gradually move towards standardization, and in this process, it is inevitable that there will be some labor pains.
In Qian Feng's view, the "double 25%" requirement has a great impact on small private equity, which means that many products on the list cannot be done.
The "double 25%" mentioned by Qian Feng refers to the provisions put forward in Article 12 of the "Guidelines for the Operation of Private Securities Investment Funds": (1) the funds invested by a single private securities investment fund in the same asset shall not exceed 25% of the net assets of the fund; (2) The funds invested in the same asset by all private securities investment funds managed by the same private fund manager shall not exceed 25% of the assets.
Listing products generally refer to private placements that tend to focus on creating one or two products, hoping that they can compete for a place in various private equity income rankings with outstanding yields, so as to attract the attention of investors, and in order to achieve this purpose, some private placements may bet heavily on a single stock to boost its stock price to rise.
Qian Feng said that small private equity generally does not have too many fund-raising channels, if the list of products can become famous, the company will be much easier to raise funds, so many private equity will do so, but under the "double 25%" requirement, private equity is difficult to have too much room for operation in this regard.
Entry and Submission
Before making up his mind to "run for smuggling", Zhang Qiao also thought that working alone meant diverting his energy to deal with a lot of trivial matters other than investment, but he still wanted to give it a try.
So, at the beginning of 2021, Zhang Qiao resolutely resigned from his "old club" a public fund, began to set up his own small private equity step by step, and issued his first private equity product at the end of the same year. Although the process was not easy and the scale of the product was not large, Zhang Qiao felt that the future was full of hope.
However, when everything began to fall into place, Zhang Qiao found himself starting to be a little overwhelmed.
The first thing in front of Zhang Qiao was countless bills. "The rent and personnel costs of the office alone are at least more than 3 million, as well as the water and electricity costs, travel expenses, office supplies costs and marketing expenses, which are indispensable in the daily office process, etc., just to maintain the most basic operations, which is a lot of expenditure."
Li Zheng said that in the past, the management of private equity was not so strict, and everyone's allocation in all aspects could be simplified, and the cost was relatively easy to control. But now there are more and more requirements in all aspects, and the cost of maintaining a private placement with a basic allocation is getting higher and higher.
For example, in terms of staffing, on May 31 this year, AMAC issued a reminder notice, requiring private equity managers to self-examine and rectify the phenomenon of less than 5 full-time employees and lack of senior executives, and if they still do not meet the requirements in the future, they will take self-discipline management or disciplinary measures; If the private equity manager has no business development plan, it is required to cancel the registration of the private fund manager in a timely manner.
Li Zheng said that this also means that those private placements with less than 5 full-time employees will either rush to replenish the staff, or wait to receive fines, and may even face the risk of being cancelled. And for each additional employee, the cost is at least two or three hundred thousand more.
In addition to these hard expenses, dealing with all kinds of interpersonal relationships also makes Zhang Qiao physically and mentally exhausted, sometimes he has to reconcile the conflicts between employees, sometimes he has to face customer inquiries, and sometimes he has to build a good relationship with the agency, and he has to spend time to maintain communication with his peers.
Zhang Qiao told Jiemian News that in the past, when he was in the public offering, there were special colleagues in charge of these things, and he only needed to concentrate on investment, but now he has been wearing many positions for a long time, "unprecedented tiredness".
"If you can make money, no matter how hard and tired you are, it's worth it", but the reality poured a lot of cold water on Zhang Qiao.
At the beginning of 2021, when I just left the public fund and issued a new product at the end of the same year, the Shanghai Composite Index was around 3,500 points, and then the Shanghai Composite Index fluctuated all the way, and in February this year, it once fell to around 2,600 points, although it has been repaired recently, and it is currently only maintained at around 3,000 points.
The net value of some products of Zhangqiao Company fell below 1 yuan shortly after its establishment, and it has not been able to recover its losses until now, and some have even fallen to around 0.8.
In fact, many fund managers who "run for smuggling" will face a similar dilemma, that is, when the market is good, they decide to leave their jobs and run for smuggling, and the products after smuggling are often issued at the high point of the market stage, and then the net value of the product follows the index correction and there is a sharp drawdown.
In the view of FOF fund manager Jiang Yun, this situation is very easy to understand, when the market is good, everyone will feel that the future is beautiful, even if there is only 100 million funds, earn 20% a year, according to the 20% commission ratio, the performance remuneration is also 4 million, and in the case of a good market, it is not a problem for funds to chase fund managers to invest, and it is not a problem to raise hundreds of millions. In this way, anyone who has some ability wants to go out and fight, "after all, it is much easier than working to make money".
But capital markets have always been cyclical. When everyone really makes up their minds to resign and run for personal gain, and then complete the filing procedures when the product is issued, often more than half a year has passed, and it is easy to have a situation where the market will take a sharp turn for the worse soon after the product is issued.
For private placements, income is generally composed of two parts: management fees and performance compensation.
Generally poor performance means that the performance remuneration part is almost zero. At a rate of 1.5%, a private placement with a management scale of 100 million yuan will only have a management fee income of 1.5 million yuan a year.
According to AMAC data, as of the end of March 2024, there were more than 8,300 private securities fund managers registered with the association, managing 92,000 private securities funds with a scale of nearly 5 trillion yuan, and have become important institutional investors in the capital market. At present, the top 400 private securities institutions account for nearly 80% of the industry's management scale, and the 2,000 private securities institutions under management account for only about 0.15% of the industry's management scale.
According to this calculation, as of the end of March this year, the average management scale of private placements of securities registered in AMAC was only 600 million yuan, and in addition to the top 400 private placements under management, the average management scale of the remaining 7,900 private placements was even less than 130 million yuan.
On the other hand, in order to attract customers, many small private placements usually set a management fee of much less than 1.5%, part of which has to be taken away by the agency, and the actual management fee is even smaller.
All this means that in the case of poor performance, it is actually the norm for small private equity to "make ends meet".
The industry is speeding up its clearance
Faced with the current situation of making ends meet, Zhang Qiao didn't know if he could still hold on to the advent of a wave of large-level markets, so that he could make a beautiful turnaround.
In Jiang Yun's view, the reality may be more cruel than Zhang Qiao imagined, many small private equity opportunities are actually only once, if you don't make some achievements at the beginning, unless the follow-up product net value is particularly amazing, it is difficult to be favored by investors again, after all, the competition in the private equity industry is very fierce now.
In fact, there are already a lot of people who can't hold on.
On June 14, the news of "a private placement of 650,000 yuan in Shanghai to sell shells" attracted widespread attention in the industry. According to the news, a securities private equity fund manager in Shanghai "sold the shell" at a price of 650,000 yuan, and said that the price was "lower than the market price", and he earned it when he bought it.
Although the exact news of the above-mentioned private placement is not known, an intermediary who did not want to be named told the interface news reporter that there are indeed many securities private shells to be sold recently, "However, the price is often related to the quality of the private placement shell, such as no violation records, can be held for a period of time and can be used with the issuance of products, etc., are all pluses." ”
There are also some small and medium-sized private equity core personnel who choose to "defect" to large companies.
ON JUNE 18, TWO PRIVATE EQUITY BIG V LIANG HONG AND XU DAWEI (ACCOUNT NAME "DAVID FREEDOM ROAD") SUCCESSIVELY POSTED ON SOCIAL MEDIA TO CONFIRM THAT XU DAWEI "CARRIED" EXISTING PRODUCTS TO JOIN LIANG HONG'S 10 BILLION PRIVATE EQUITY HAINAN SHIVA. Xu Dawei clearly mentioned in the article that "the operating costs of private placements are getting higher and higher, and the market environment is conducive to large private placements and not conducive to small private placements." ”
Previously, Shanghai Runshi Private Equity, which has a management scale of 5-1 billion yuan, announced on May 22 that it would start the business and personnel integration with 10 billion private equity Zhengxin Valley Capital, and the company's founder Lei Ming will join Tanzhen Investment, a subsidiary of Zhengxin Valley Capital, as a partner and investment director, and the existing business and team members of Runshi Private Equity will join together.
With the successive introduction of new regulations in various aspects, illegal private placements are also being cleared at an accelerated pace, among which small and medium-sized private placements are also the "hardest hit areas".
According to the data of the AMAC, as of June 24, only this year there have been 275 securities private placement cancellation, from the type of cancellation, of which 112 are voluntarily cancelled, 128 are cancelled by the association, and another 35 are cancelled for 12 months.
According to Li Zheng, "12 months of cancellation without management" is a new type of cancellation added by AMAC in May this year, but the "Measures for the Registration and Filing of Private Investment Funds" and the "Regulations on the Supervision and Administration of Private Investment Funds" implemented last year have clarified the relevant provisions. AMAC now specifically lists "12 months of unmanaged cancellation" as a separate type of cancellation, which also means that there is not much time left for "shell private placement".
The Jiemian News reporter flipped through the relevant provisions and found that Article 76 of the Measures for the Registration and Filing of Private Investment Funds clearly states that if a private fund manager fails to file a self-issued private fund within 12 months after registration, or fails to file a new private fund within 12 months after the liquidation of all the private equity funds on record, the association shall cancel the registration of its private fund manager and publicize it, unless otherwise specified.
Article 14 of the Regulations on the Supervision and Administration of Private Investment Funds also mentions that if a private fund manager fails to file the first private fund within 12 months from the date of registration or after all the private funds under its management have been liquidated, and fails to file a new private fund within 12 months from the date of completion of liquidation, the registration and filing authority shall promptly cancel the registration of the private fund manager and publicize it.
Private placement products with a management scale of less than 5 million yuan are also being cleared at an accelerated pace.
Article 4 of the Guidelines for the Operation of Private Securities Investment Funds issued by AMAC on April 30 clearly states that if the average daily net asset value of a private securities investment fund in the previous year is less than 5 million yuan, or the net asset value of the fund is less than 5 million yuan for 60 consecutive trading days, the subscription shall be stopped and disclosed to investors within 5 working days; If the net asset value of the fund is still less than 5 million yuan for 120 consecutive trading days after the subscription is stopped, it shall enter the liquidation procedure.
Wang Qiang said that it is almost certain that the vast majority of products with a management scale of less than 5 million yuan are small private placements.
It is worth mentioning that in June this year, the news that "commercial banks are not allowed to sell private equity funds" has also attracted widespread attention.
Although there are no exact documents yet, this news still makes Qin Hang, who has gone through twists and turns to squeeze his private equity into the "white list" of a commercial bank.
Qin Hang said that the bank itself has a lot of high-quality customer resources, and it will be much easier to raise funds to enter the bank's distribution channels. However, if you want to get the "admission ticket" from the bank, you need to meet many hard conditions, such as the company's scale, performance, personnel, brand, etc., which must meet certain standards. It was not easy for me to negotiate a cooperation with a commercial bank, and if the bank was really banned from consignment, my efforts would be in vain.
However, a number of small and medium-sized private equity people interviewed by Jiemian News did not have too many worries about this, because they are still far from the "white list" of banks.
"Only large private placements, at least medium-sized or above, can cooperate with banks." Li Zheng said helplessly.
Today, most of the old people in the bureau are physically and mentally exhausted, and there is still an endless stream of newcomers who run for personal gain.
Zhang Qiao said that a friend of his pulled up a five-person group of all post-90s at the beginning of the year and is trying to weave another private equity dream, "It is difficult to judge how far this small private equity with an initial capital of 15 million can go, I hope they can create a miracle." ”
(At the request of the interviewee, Zhang Qiao, Li Zheng, Wang Qiang, Bai Ye, Qian Feng, Jiang Yun, Qin Hang, etc. are pseudonyms)