[Editor's note]
Investigation and study is the heirloom of our party and the basic skill for doing a good job in all aspects of work. Party members and cadres at all levels in Songjiang keep in mind their original mission, stand firmly on the people's position, go deep into the front line to listen to the voices of the masses, and swoop down to feel the truth and do practical things.
"Shanghai Songjiang" launched the "Research Notes" column, presenting the research results in an all-round and three-dimensional way, and in the fiery practice of meeting the people's beautiful yearning for a high standard and high quality, and promoting the development and construction of a modern new Songjiang with "science and technology, humanity and ecology", it has solidly promoted the theme education to be in-depth and practical, and has achieved results, and strived to write a new chapter of high-quality development.
This issue focuses on the research notes of Shen Jianming, Secretary of the Party Committee and Director of the District State-owned Assets Supervision and Administration Commission.
Breakthrough and Innovation: Discussion on the Business Development of State-owned Enterprise Equity Funds and Response to Challenges
Shen Jianming, Secretary of the Party Committee and Director of the District State-owned Assets Supervision and Administration Commission
The fund is one of the important links between capital and the industry, and through forward-looking investment in the industry, the fund can boost scientific and technological innovation, the transformation of real enterprises and the development of strategic emerging industries, and gradually become a tool for enterprise mixed ownership reform and merger and acquisition financing, and is an important means of market-oriented innovation. In recent years, based on the positioning of the district-level investment platform, we have vigorously developed the equity fund investment business, but in the development of the fund business, it is easy to deviate from the development goals of the main business, the lack of management system, the management of investment funds of enterprises below the second and third levels, and the lack of risk awareness. In order to better deal with such risks, I led a team to SDIC to conduct field research.
As of June 2023, SDIC Group has invested in a total of 57 projects and funds, including 23 self-operated funds and projects, 34 participating funds, and a total of 341 investment projects, with a total investment of 2.979 billion yuan. The total scale of the fund to attract cooperative capital to jointly establish is 24.209 billion yuan, and 99.975 billion yuan of social capital is leveraged through fund investment, of which 40.671 billion yuan is invested in Songjiang. The main investment direction is the construction of the G60 science and technology innovation corridor in the Yangtze River Delta, especially the high-quality enterprises in the Songjiang region, focusing on the "6+X" strategic emerging industries such as integrated circuits, biomedicine, artificial intelligence, etc., and effectively giving full play to the guiding role of fund investment in Songjiang's social capital, and promoting industrial transformation and upgrading, but there are also some problems that need to be solved urgently.
First, grasp the management and control, and work hard in the centralized management and control of the fund business
In the survey, we found that state-owned enterprises have insufficient centralized control in the field of fund business investment. This deficiency is mainly reflected in investment decision-making, risk management, project selection, etc. The lack of a clear process and professional team in investment decision-making often leads to the opacity and arbitrariness of investment decision-making, the lack of a sound risk management system makes it difficult to identify and respond to potential risks in a timely manner, and the lack of a strict evaluation and screening mechanism for project selection may lead to a mismatch between investment projects and the core development goals of enterprises, affecting the effective allocation of funds. The existence of these situations will lead to increased risks, waste of resources and other problems, and affect the sustainable development of the fund business. Therefore, in response to these circumstances, we give full play to the positioning advantages of district-level investment platforms and strengthen the centralized control of fund business by state-owned enterprises.
The first is to provide corporate policy information to help enterprises optimize investment decisions. As a bridge between the government and enterprises, we fully guide and give full play to policy advantages, strengthen policy publicity and information exchange among state-owned enterprises, and help state-owned enterprises standardize the investment decision-making process. At the same time, we guide enterprises to establish a team of experts in investment, finance and industry to ensure multi-dimensional consideration of decision-making. In the next step, we will guide SOEs to introduce contingency assessment and risk simulation mechanisms into the investment decision-making process to help them conduct comprehensive comparisons and risk assessments of different options before making final decisions. The second is to strengthen risk management and standardize the selection of state-owned enterprise projects. SOEs should establish and improve risk management systems covering risk identification, assessment, monitoring and response. Quantitative and qualitative methods can be introduced to identify and assess various types of risks, taking into account potential risks holistically. At present, the quality of investment projects is uneven, and standardizing the project risk early warning mechanism can help enterprises monitor the risks in operation in a timely manner. At the same time, we began to study and formulate the project selection criteria for state-owned enterprises, and evaluate the suitability of projects and enterprises from several aspects such as the matching of strategic objectives and the strategic positioning of the project.
Second, grasp the market and make efforts in the market-oriented operation mechanism
Due to the relatively short start-up and development time of state-owned enterprises in fund investment, the maturity of the capital market is insufficient, the number of high-quality investment projects is small, and the cultivation positioning is not clear. Therefore, in the process of research, I focused on improving the matching mechanism between fund investment operation and market, improving the scientificity, effectiveness and efficiency of fund investment business operation and management, and ensuring the safety of state-owned capital.
The first is to strengthen the construction of the fund management team of state-owned enterprises. At present, the fund management team of state-owned enterprises is mainly divided into fund investment team, fund risk control team and investor service center team. In order to give full play to the enthusiasm of the fund team of state-owned enterprises, we urge state-owned enterprises to further strengthen the team assessment and incentive system, such as flexible use of tools such as shareholding by the core management team, co-investment, and excess income sharing, so as to effectively mobilize the initiative of the fund management team. The second is to strengthen the training of the investment ability level of the fund team. Our subordinate state-owned enterprise fund team regularly conducts business training classes, continuously strengthens professional investment concepts and investment strategies, and hires experts to conduct in-depth research on financial markets, industry dynamics and domestic and foreign macroeconomic conditions, so as to strengthen the team's ability to study and judge the latest market. The third is to strengthen post-investment management and improve the exit mechanism. The full execution of post-investment management and the optimization of the exit mechanism are one of the key elements to ensure the success of the fund's investment. In the survey, we paid attention to the fact that post-investment management should run through the entire investment cycle, and the improvement of the exit mechanism is crucial to the return of funds and the effective allocation of assets. Therefore, in the later stage, we will focus on planning the exit strategy of the fund, studying the reasonable exit mechanism, analyzing the cases of sale, M&A or equity transfer, and analyzing the data of the team and market practice, so as to maximize the return on investment.
Third, grasp supervision and make efforts to explore and improve the fund supervision system
The investigation found that the operation mechanism of state-owned enterprises in equity investment funds is relatively inefficient, and because the management of state-owned enterprises has different administrative levels, when evaluating the performance and income of the management, it is usually judged by the influence of the management on the investment behavior of the equity investment fund, which is not conducive to some investment projects with long-term returns, and is easy to make enterprises miss investment opportunities and indirectly damage the interests of the state. Therefore, it is particularly important to explore and optimize the state-owned assets supervision system in line with the characteristics of the industry.
The first is to improve the management system. We have further improved the fund management system, explored the fault-tolerant mechanism for the behavior of equity investment funds by clarifying specific regulatory requirements, and accurately distinguished the behavior of the fault-tolerant mechanism, so as to provide a substantial guarantee for the bold investment of state-owned enterprises. The second is to implement the regulatory mechanism. We will strengthen the dynamic tracking and monitoring of fund investment enterprises to carry out fund business by promoting the registration and management of state-owned rights and interests of limited partnerships, and in the later stage, we will explore the audit and inspection work of fund investment enterprises and strengthen audit supervision of fund business. The third is to improve the service level. In the process of investigation, we guide state-owned enterprises to strengthen resource docking, and guide the organic combination of venture capital and innovation resources, such as we help state-owned enterprises to connect and invest in key industrial enterprises in the region such as integrated circuit large silicon wafers, photoresists, thin film deposition equipment, aero engines, ALD industrial machine tools, and autonomous driving gyroscopes. At the same time, we promote discussion and exchange activities for state-owned enterprises to carry out fund business, share successful experience, and improve the overall management level.
With the transformation of state-owned assets supervision from "asset management" to "capital management", more and more attention has been paid to the preservation and appreciation of state-owned assets. We will continue to help Songjiang state-owned enterprises to further anticipate the risks of equity investment fund operation and management, deepen reform, promote industrial upgrading, promote the smooth development of private equity funds, expand their own development scale, improve their own development level, and improve industrial concentration, and significantly improve the allocation efficiency of state-owned capital.
Source: Shanghai Songjiang