Equity investment funds came to the surface

By: yqkslh

Recently, the State Council agreed that the National Social Security Fund invested by the State Development and Reform Commission approved the Industrial Development and Reform Commission filing funds and in the market-oriented equity investment funds, the overall investment ratio does not exceed the total assets of the National Social Security Fund of 10%. This was widely interpreted as the industry regulator to institutional investors independent equity investment fund further examples of policy restrictions, a warm response.
The end of 2006, the Bohai Industry Investment Fund was officially established, marking the RMB equity funds large-scale trials to start. At present, the third batch of pilot projects have been submitted to the State Council, has approved and the forthcoming ratification of the Fund's total size of over 100 billion yuan. In addition to Ding Hui, Hong-yi as the representative of the scale of 5 billion yuan in the following medium and small equity funds, also began in Development and Reform Commission filing.
CAO Wen-lian, deputy director in "Chinese investment" in an exclusive interview that "overall industrial investment fund pilot programme" to be submitted to the State Council, it is possible to eliminate the obstacles to a solid step forward.

When the pilot programme introduced ?
"Chinese investment": social security funds allowed private equity investment fund industry attracted widespread attention in the future in banking, insurance funds and state-owned private equity investment fund's policy is not to lifting ? The overall plan when the pilot can be introduced ?
CAO Wen-lian: You speak of foreign so-called "private equity funds," China is the past, commonly known as the "industrial investment funds."
More and more people in favour of industrial investment funds and private equity funds collectively referred to as the concept of "equity investment fund", such as Dai Xianglong, Wu Xiaoling, and other authorities, and if have set up the Tianjin, Beijing, "Association of equity funds," I very much agree with.
Now, in addition to the State Development Bank and the National Social Security Fund, insurance, banking, the central state-owned enterprises, and other major institutional investors have not yet independently decided to invest in equity funds the right to report their cases to regulatory approval as. State Council approved the pilot programme overall, I believe it will speed up the various departments of the policy "relaxing." As for the overall pilot programme when introduced, depends on the extent of the consensus of various departments.
"Chinese investment": the trade dispute more of a problem is that the policy will be in the form of the Organization of private equity funds to restrict ? For example, because the partnership will not suitable for China's current policy conditions and restrictions ?
CAO Wen-lian: Industry Fund as a financial varieties abroad in the form of varied. Fund industry on the organizational form of disputes still exist, such as corporate, trust-based, partnership-based, which is good.
In the pilot phase is common ground while reserving differences, allowing three kinds of forms that exist, this is also reflected the principle of market-oriented operation.
This variety of forms, not only refers to the organizational form of "multi-form", including the pilot areas "in various forms." For example, industrial investment has also divided into growth funds, venture capital funds, fund mergers and acquisitions, infrastructure funds, these forms of funds will also be there. In fact, has approved a pilot, you can see, there are three kinds of funds forms of organization.

"Chinese investment": we set up the foreign equity funds have any kind of requirement? ?
CAO Wen-lian: I personally think that when conditions are ripe, should be allowed to conduct foreign investment in China equity fund management company's pilot, at least in the joint venture management companies, allowing them to raise in the establishment of the RMB funds. However, this would also like to reach a consensus between the relevant departments and a clear policy.

"Chinese investment": how a system to protect the interests of investors? ?
CAO Wen-lian: First of all must be clear that equity funds should be between institutional investors and managers of the game depends on the two sides agreed to the rules of the game. Institutional investors in the choice of manager's time to consider the manager he can return.
At present, regulatory authorities need to do is to invest in the investment ratio to regulate. For example, what proportion of insurance to allow commercial banks and investment funds equity funds, as well as risk factors and control provisions, such as rules for managers is to review its qualifications, look at it is not a qualified managers, whether there is a team performance And secondly in the pilot period of large investment funds or to the direction and scope of audit, the small and medium-sized equity funds through the filing, on-line publicity appropriate disclosure, played the role of social supervision. Future still rely mainly on industry associations to achieve self-discipline.
In fact, we feel from the pilot, from the asymmetry of bargaining power, the current scale of some investors to tilt. Because of the limited institutional investors, many market managers, according to reflect, the manager in the current negotiations in a relatively disadvantaged position. From the perspective of development managers, but also an appropriate number of pilot control.

Industry restrictions and Zhuadafangxiao
"Chinese investment": You talked about fund investments may be some scope of the restrictions, which limit it ?
CAO Wen-lian: including some industries and fields. Since the pilot phase, it would be the priority areas of support, such as energy, high-tech, infrastructure, energy conservation and environmental protection, corporate mergers and acquisitions, are pilot fund priority investment areas. In addition, some redundant construction serious processing and manufacturing, there is no inclusion. There are some relatively adequate capital, the listed companies more of the industry, has been full competition, also not included in the pilot areas.

"Chinese investment": Some people think that it approved the pilot of the fund industry still has a policy of color, how to ensure that the principle of commercial service ?
CAO Wen-lian: only from the pilot's name on the name implies, approved several pilot projects in this fund industry seems to be a policy of color. Of course, these large-scale fund industry is not fully approved by the commercial considerations of efficiency, but also taking into account the support of national strategies and major economic restructuring.
In fact, our preparation and the establishment of the Fund approved the process, has the option of implementing the principles of the market, local or industry bodies to avoid holding. We respect the people independently choose investment managers or administrators to independently choose investors. In order to ensure that business operations, the fund investment is not confined to certain regions and industries, such as the Bohai Industry Investment Fund is not limited to the Binhai New Area and the Bohai Rim region.

"Chinese investment": You once said that the private equity fund Zhuadafangxiao and how to achieve grasp and the release of small, of the specific initiatives ?
CAO Wen-lian: the so-called grasping, on the one hand, refers to grasp the larger fund-raising. For instance, on the more than 5 billion yuan, financial institutions, insurance agencies, social security funds, the state-owned enterprises to participate in investment funds.
Of these funds we are currently implementing He Zhunzhi.
From the real situation, the experience of foreign countries as well, such as the United Kingdom, the major fund appropriate supervision, to open up small funds.
On the other hand, grasp the more important, an issue of promoting healthy development of the market event. The first is grasping develop the market of the management team, this is the most important Secondly, we should pay attention is the reunification of the departments and regulatory agencies recognize that this is the most difficult of the third to be done on the education of institutional investors.
At present, there are seven departments as a pilot leadership team members, the next step should allow management of state-owned enterprises, fiscal and taxation departments are involved.

Exit mechanism for the establishment and improvement of
"China Investment": "voted into the retreat," four sessions, the exit mechanism, the voice of the industry is also relatively large, that private equity funds is a major obstacle to development, what is your opinion of the ?
CAO Wen-lian: exit mechanism, including two aspects, one is from the Fund for the withdrawal of investment projects, one is to withdraw from the fund itself, this link in the international community not to take the same approach.
I think China should improve the mechanism, but also have some way to go, the need to strengthen coordination, and strengthen capital markets improve. In fact, we have made great progress, such as corporate shares began two years ago, circulation, which is the Fund to withdraw from a huge positive.

"Chinese investment": there is also need for supporting policies which ?
CAO Wen-lian: The current policy of supporting the most important one is that market access policy, which is state-owned enterprises, banks, insurance funds, local pension funds, and so on how to enter the market. The need to clear what kind of restrictions, as the case now to examination and approval, and the principle of the operation of the market do not match.
Second, we need to further clarify the tax policy, equity funds a fair and reasonable tax burden. Long-term view, I think we should learn from mature market economy under the conditions of the capital gains tax policy.
The third is to withdraw from the policy. Should encourage enterprise development fund in the early and mid-stage access, these businesses developed into a mature qualified enterprises, to get through this they deserve, even if the return is high. We want to establish policy in this area.
In addition, is the promotion of trade associations and speed up the establishment and formation of self-regulation mechanisms to promote the administrator qualifications and standard-setting.
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