In the context of intense competition in the industry, which has resulted in shrinking profits, some private equity investment institutions (PEs) that are keen on market observations have begun a quiet transformation. On February 6, from the domestic top ten private equity investment company Advantage Capital Company, it was learned that the advantage capital that had previously registered a private equity investment fund in Liangjiang New District would enter Chongqing to set up a venture capital fund with a total scale of nearly 500 million yuan. The difference from traditional private equity funds is that the projects that venture capital funds focus on will move forward and focus on subdivided industries. At present, this venture capital fund has started the business registration process and completed the initial subscription of funds.
Well-known private equity transfer to venture capital
"This venture capital fund with a total scale of 500 million yuan has basically completed the subscription of project funds." Lin Dailian, the managing partner of Caizhong Venture Capital Fund, which is responsible for managing this venture capital fund, introduced investors who participated in the subscription Including Chongqing's state-owned enterprises and well-known private enterprises, some of them from real estate development and automobile and motorcycle industry.
As the controlling shareholder of Caizhong Venture Capital, he has successfully invested in the superior capital of companies such as McCawlin and NVC Lighting. It is not the first time that advantageous capital has been deployed in the Chongqing market. As early as July 2011, Advantage Capital initiated the establishment of a private equity fund Chongqing Advantage Baina in Liangjiang New District. At present, it has invested in 4 Chongqing enterprises with a total investment of 300 million yuan. These 4 companies are modern manufacturing companies. And new material industry, modern agriculture, IT new technology industry.
Why less than a year after the establishment of private equity funds in Chongqing, the advantaged capital "opened twice"? Lin Dailian said that Liangjiang New District is a nationally positioned modern service industry highland, electronic information and financial service outsourcing, automotive logistics, aviation logistics Prospects in the field are expected.
Unlike the private equity investment fund set up in Chongqing for the first time, the investment targets of this venture capital fund will move forward, focusing primarily on high-growth companies and micro-enterprises that have just started. It is understood that this venture capital fund established by Caizhong Venture Capital Investment Fund will be a professional investment, and the main investment target is modern service industry enterprises. At the same time, nearly 50 million yuan of the total fund of 500 million yuan will also be allocated to the incubation fund to act as an angel investor, and special support will be given to college entrepreneurs who have good ideas but lack start-up capital.
Competition causes private equity profits to shrink
Why is this private equity investment fund ranked in the top ten in China quietly transformed into venture capital funds? "With the fierce competition in the private equity industry, if you only invest in mid-to-late stage projects, the profit will not be very high." Lin Dailian revealed, This is also one of the important reasons why superior capital came to Chongqing to set up venture capital funds.
"Now the PE returns are not as good as they were today," earning less than before. "It is an industry consensus." Lin Dailian revealed that with the gradual decline in the valuation of the secondary market, PE investments are not so profitable now. If it is improperly operated, it may lose money. In this context, the private equity industry will develop in subdivisions, the division between PE and VC (venture investment) will be more clear, and the capital requirements for PE will be higher, and VC will increasingly emphasize specialization.
According to the data, in the context of the downside risks facing the international economy, the listing of Chinese companies declined in 2011, the amount of financing and the number of listings have decreased compared with 2010, and the profits of private equity venture capital institutions have also shrunk.
In 2011, a total of 355 Chinese companies listed 356 IPOs in 13 overseas markets and 3 domestic markets, with a total financing amount of 61.532 billion US dollars. Compared with 2010, the number of Chinese companies listed in 2011 decreased by 120, and the amount of financing decreased by 41.6%.
Due to the decline in the total number of IPOs in 2011, the number of listings and financing amounts of Chinese companies supported by private equity venture capital institutions decreased throughout the year. A total of 170 Chinese companies supported by venture capital and private equity investment institutions were listed on domestic and foreign markets, completing 171 cases. IPO, the number of IPOs decreased by 50 compared with 2010, with a total financing of 29.542 billion US dollars, a decrease of 25.2% compared with 2010.
From the perspective of return on book investment, in 2011, the average book return of private equity VC institutions at home and abroad was 7.78 times. Compared with the average book return on investment of 9.27 times in 2010 and abroad, private equity venture capital gains through IPO withdrawal are gradually decreasing.
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