In May this year, the first anniversary of the formal implementation of the new rules for private placement registration, the industry reshuffle accelerated significantly. With the sharp rise of the registration threshold for private equity managers, the number of private placement completed for the record has dropped sharply.

In the year since the new rules were implemented, a total of 214 private offerings have been registered, down more than 80 per cent from 1315 in the previous year, according to the China Securities Investment Fund Association. Since May, only one new private placement has been registered in Shanghai Hongyuan. Under the high threshold, private equity has officially entered the stock competition, and the total number of managers has been reduced by more than 3500 from the high point.

At the same time, there has been a marked increase in the number of managers cancelled in the past year, a large number of risk institutions have been withdrawn, the regulatory guidance of "supporting the good and limiting the inferior" has been further strengthened, the concentration of the industry has also been increasing, and many small and medium-sized institutions will inevitably be eliminated.

The first anniversary of the implementation of the new rules

The number of private placement filings has dropped sharply.

On May 1, 2023, the measures for Registration and filing of Private Investment funds came into effect. The new rules clearly define the principles of registration and the standards for the registration of managers, and require that the paid-in capital of private equity managers be not less than 10 million yuan.FreepokerroomAt the same time, stringent requirements are put forward for senior executives and shareholders of private equity funds. In the first month of the implementation of the new rules, only two private equity companies completed their registration.

In May this year, the new regulations for the filing of private placement ushered in the first anniversary of their formal implementation. On the whole, the implementation effect of the new rules for private placement filing is remarkable, with the rise of the threshold for entry, the number of private placement completed for the record has dropped sharply.

In the year since the new rules were implemented, from May 1, 2023 to May 1, 2024, a total of 214 private placements have been registered, down more than 80 per cent from 1315 in the previous year, according to CICC. Among them, the number of private equity and venture capital managers registered is the largest, 144; the number of private equity investment fund managers registered is 68, and that of other private equity managers is 2.

It is worth mentioning that since May, only one new private placement has been registered in Shanghai Hongyuan, which is a private equity fund manager with a registered capital of 10 million yuan, and the actual control is Zhang Kaicheng. Zhang Kaicheng worked for Two Sigma, a world-renowned quantitative hedge fund, and served as a quantitative portfolio strategist and vice president in the investment department.

Judging from the number of filings in the past few years, basically every year, more than 1000 private placements have completed their registration and entered the private equity management industry. In the first year after the implementation of the new rules, the number has plummeted to more than 200, marking the official arrival of stock competition in the private equity industry.

According to a reporter from the Securities Times, after the implementation of the new rules, it is significantly more difficult to register for the record of private placement, and the filing process of many private equity managers can be described as twists and turns.

Yu Weiquan, a senior partner at Beijing Kangda (Guangzhou) law firm, said that it is difficult to put private placement on record, mainly because the new rules are particularly strict for senior executives. From the practical point of view, the securities type of private placement, it is clearly required to have 5 years experience in private placement, public offering, futures or asset management in order to serve as the actual controller, but only with the experience of the securities firm, it is very difficult to act as the actual controller. At the same time, in terms of performance, the scale standard managed by the last company is about 50 million yuan, which is less than 50 million yuan and 5 years experience, and the probability of filing is lower, and the filing standard is more stringent as a whole.

In addition, with the tightening of IPO (initial public offering), the new setting of equity private placement has also suffered a certain impact.

Yan Jinqiang retreats

The stock of managers has shrunk obviously.

With the further strengthening of the regulatory guidance of supporting the superior and limiting the inferior, the situation of strict advance and retreat is also increasingly clear, and the number of private equity managers is showing an obvious downward trend.

In February 2022, the stock of private equity fund managers reached 24683, an all-time high. Since then, the number of private equity managers has continued to decline. As of the end of March this year, the number of private equity fund managers was 21098, down 3585 from the peak. Among them, there are 8328 private equity fund managers, 12526 private equity and venture capital managers, 9 private equity asset allocation managers and other private equity managers.

Over the past year, the number of managers cancelled has been increasing, and a large number of risk institutions have been withdrawn. In 2023, the China International Association cancelled a total of 2537 private offerings. Since May this year, CICC has cancelled a total of 164 private offerings, of which 26, 36 and 102 have been cancelled by association, voluntary cancellation and 12-month unmanaged cancellation, respectively.

On May 11, the China International Association wrote off 96 private offerings for the first time on the grounds of "12 months without control". The website of the China Foundation Association has also been updated accordingly, and the type of cancellation has been added to the "12-month unmanaged cancellation". During the year, the China International Association has cancelled 806 private offerings, of which 494, 200 and 10 were cancelled by the association, voluntarily and according to the announcement, respectively.

Zhu Jimi, general manager of Jixi (Shanghai) Management Consulting Co., Ltd., said that since 2022, the access for private equity fund managers has changed from rapid development and dynamic balance to the direction of outbound rather than inward. On the one hand, by rearranging and issuing the relevant requirements for the registration of private equity fund managers, we will greatly raise the entry threshold from the aspects of the company's capital strength, shareholder qualification and senior management experience, and pay more attention to the ability of professional investment and research; on the other hand, we will gradually get out of the institutions that do not have sustainable business capacity or major violations among private equity fund managers, and support high-quality institutions with good investment and research capabilities.

Stock competition

Matthew effect is becoming more and more obvious.

After the private placement enters the stock competition, the concentration of the industry will continue to improve, the Matthew effect will also become more apparent, and many small and medium-sized institutions will inevitably be eliminated.

Only 780 private equity funds were registered in February, the lowest on record, according to Wind. In October last year, a total of 821 private equity funds were registered, less than 1000 for the first time, and in March this year, a total of 858 private equity funds were registered, once again fewer than 1000.

In terms of the scale of filing, in February this year, the scale of newly filed fund products was 283.Freepokerroom.54 billion yuan, up from 27.222 billion yuan in October last year. Among them, the new filing scale of private equity funds is only 8.445 billion yuan, less than 10 billion yuan, setting a new record. Looking back at the peak in December 2021, the size of newly filed private equity funds was as high as 170 billion yuan.

Against the background of an innovative low number and scale of newly filed private equity fund products, it is almost impossible for small and medium-sized private equity companies to raise funds, but head private equity companies can still raise large amounts of funds and file products. For example, Yanfu Investment has registered 33 products in 2024, and 150 products in 2023; Wenbo Investment has registered 15 products this year, and 150 products in 2023.

According to a reporter from the Securities Times, since 2023, a large number of private placements have not registered a new product, and the management scale has shown a downward trend. At the same time, the number of liquidations continues to increase. A total of 1413 funds were liquidations in March this year, compared with 1899 funds in December last year.

Data disclosed by the China Infrastructure Association shows that currently, the top 400 private equity institutions under management account for nearly 80% of the industry's management scale, while the bottom 2000 private equity institutions under management account for only about 0.15%.