Top managers have become "stewards" across regions to guide the marketization of fund operations

With the development of the guidance fund industry into the deep water area, the cooperation and interaction of guidance funds between different regions and the group heating have become more and more close. Especially for regions with weak fund management experience, the introduction of a head management team to manage local guidance funds across regions means that guidance funds continue to seek new trends in market-oriented operation.

For example, on March 22 this year, Zhengdong New District and Shenzhen Angel Investment Guidance Fund Management Co., Ltd. (hereinafter referred to as "Shenzhen Angel Fund of Funds") jointly released the launch of the Zhengzhou Zhongyuan Science and Technology City Science and Technology Innovation Industry Investment Fund (hereinafter referred to as "Zhongyuan Science and Technology Innovation Fund") with a scale of 1 billion yuan. The FOF focuses on artificial intelligence, biomedicine, information innovation, 5G intelligence and other industrial fields, with Shenzhen Angel FOF as the manager.

On April 2, the signing ceremony of Zhejiang Province's "specialized, special and new" (Wenzhou) fund of funds was held in Wenzhou. The total scale of the fund is 3 billion yuan, which is jointly established by Yueke Financial Group, Zhejiang Industrial Fund and Wenzhou Industrial Development Fund, with Yueke Financial Group as the fund manager.

In addition, there are also Shenzhen Venture Capital, Shenzhen Investment Control Capital, etc., which are testing the waters of cross-regional management guidance funds. Exploring the reasons behind this trend, a government guidance fund executive from the Yangtze River Delta region analyzed the 21st Century Business Herald that now, local governments hope to promote the transformation and upgrading of local industries and drive local economic development through fund investment. However, the excellent guidance fund management team is mainly concentrated in first-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen, and talents are relatively scarce for second- and third-tier cities, so it is necessary to introduce excellent teams across regions to manage local guidance funds, which is also a manifestation of more efficient and market-oriented guidance fund operation.

"At the same time, with the continuous maturity of the equity investment market, there are also some leading management institutions in China that have grown from small to large. It itself has the desire to expand the scale of management, so after deeply cultivating the region, it is reasonable to expand to other regions and export management capabilities. He said.

The head guide fund managers have gone out

It is understood that the Shenzhen Angel Fund of Funds was funded by the Shenzhen Guidance Fund and was officially unveiled in March 2018. The emergence of the Shenzhen Angel Fund of Funds can be said to have set off an upsurge of angel guidance funds across the country, and it has also made the guidance fund support "early investment and small investment" truly implemented.

After six years of development, the scale of Shenzhen Angel Fund of Funds has reached 10 billion yuan, becoming the largest angel investment government guidance fund in China. At the same time, Shenzhen Angel Fund of Funds also intends to export its management experience to other regions, and cooperating with Zhengzhou is an important step for it to go outward. In September 2022, Shenzhen Angel Fund of Funds signed a strategic cooperation agreement with Zhengzhou Angel Fund of Funds to officially take over the Zhengzhou Angel Fund of Funds with a scale of 5 billion yuan.

This time, Shenzhen Angel Fund of Funds and Zhengdong New District jointly released the launch of the Central Plains Science and Technology Innovation Fund, and became the manager of the Central Plains Science and Technology Innovation Fund. It is understood that this cooperation marks the deepening of the cooperation between Zhengdong New Area and domestic leading fund institutions, and will further lead and drive all kinds of social capital and venture capital institutions to carry out scientific and technological innovation and transformation of scientific and technological achievements around Zhongyuan Science and Technology City.

In the future, Shenzhen Angel Fund of Funds will join hands with Zhongyuan Science and Technology City, relying on the practical experience of Shenzhen Angel in fund ecological building, post-investment empowerment, transformation of scientific and technological innovation achievements, etc., focusing on scientific research institutions such as the Provincial Academy of Sciences, national and provincial laboratories, and university research institutes, with the model of "promising government + effective market", through sub-fund cooperation, increase the introduction of capital forces, and accelerate the cultivation of innovation ecology.

Another fund manager that has begun to export its management capabilities is also from Guangdong. It is understood that Yueke Financial Group is a state-owned enterprise authorized by the Guangdong Provincial People's Government and one of the earliest venture capital institutions established in China. According to the official website of the group, up to now, the registered capital of the group is 10.6 billion yuan, the total assets are 43.626 billion yuan, and the scale of the Guangdong science and technology fund exceeds 100 billion yuan, covering 18 cities in the province, covering 17 strategic industrial clusters in the province, and promoting more than 180 enterprises to achieve IPO listing.

Zhejiang Province "Specialized, Specialized and New" (Wenzhou) Fund of Funds is the first inter-provincial cooperation fund of Yueke Financial Group, which reflects strong market-oriented characteristics in the whole bidding process. It is understood that in order to promote the smooth landing of the fund, the Wenzhou Municipal Finance Bureau and the Municipal International Finance Company contacted and mobilized the city's financial institutions to recommend fund management institutions, docking with domestic head institutions, brokerage institutions and other state-owned or private background institutions, a total of more than 60, and finally Yueke Financial Group was confirmed as the first place through market-oriented public selection, on-site roadshow defense, review due diligence and other links, and obtained the qualification of specialized and special new fund of funds management institutions.

Cross-regional management tests the team's professionalism and localization construction capabilities

In addition to the above two latest cases, there are also many leading guidance fund management teams that have begun to manage guidance funds across regions. In November 2022, Shenzhen Investment Holding Capital signed an entrusted management agreement with Shaoxing Industrial Fund. With an initial scale of RMB 15 billion, the fund is the first local regional guidance fund managed by Shenzhen Investment Holding Capital.

Of course, the most representative case is that in July 2023, the first phase of the Hubei Provincial Government Investment Guidance Fund with a scale of 20 billion yuan was officially released.

An industry insider who is well versed in guiding fund management analyzed the 21st Century Business Herald that the combination of head managers and local governments in other places is a mutually beneficial consideration for both parties.

From the perspective of fund managers, first of all, the pressure of difficulty in raising funds in the market is widespread, and a large number of fund managers are competing for a small amount of funds. After deeply cultivating the region, expanding to second- and third-tier cities and managing local guidance funds is conducive to expanding the management scale of the fund and maintaining a virtuous cycle of its own institutional operation. On the other hand, enterprises that have invested in the past, especially manufacturing enterprises, have the need to land and build factories. The manager manages the guidance fund in many places, which also gives the enterprise more opportunities to choose when building a factory.

From the perspective of local governments, the advantage of introducing a remote head management team is that it can help local management guidance funds through the output of management experience and professional ability. Second, they have accumulated a wealth of historical project resources, and the introduction of these projects into the local area can promote the development of local industries.

However, it should be noted whether the management team really has professionalism and moat, and whether it has formed market-oriented capabilities that can be exported to the outside world. If the management team has developed relatively good investment performance because of the high-quality resources in the past location, such a team will usually not be favored.

Second, if the management team does not have a local team when managing funds across regions, there may be a phenomenon of ungroundedness, and it may not be able to make investment decisions based on a deep understanding of the development of the local industry. Usually the local government will require the manager to have a local team, which is conducive to daily communication and business promotion.

In the long run, is the local government's choice of external "stewards" sustainable? Li Junfeng, deputy secretary of the party committee and general manager of Huizhou SDIC and chairman of the Huizhou Industrial Fund of Funds, believes that this should still be decided according to local conditions. If the local area is rich in resources and funds, and you want to quickly expand the scale of equity investment, but the localization team has not yet been established, you can choose to entrust an external high-quality team to manage the guidance fund.

However, even if they choose to entrust the management to an external team, in the later process of cooperation, the local government will also want to cultivate its own local fund of funds team or direct investment team. "In the long run, our local guidance fund management team will have a better understanding of the local industrial structure and resource endowment, and will be more able to promote the upgrading and development of local industries in the form of funds. Li Junfeng told the 21st Century Business Herald.

Liu Jingran, senior investment manager of LP Investment Advisory, also told the 21st Century Business Herald that many local government funds cooperate with external high-quality institutions to help teams make up for their own shortcomings in the short term. However, in the long run, the establishment of a local direct investment team and a fund of funds management team will be more conducive to the development of the local venture capital ecosystem.

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