In the new economic era, with the country's continuous emphasis on equity investment, S Fund has entered a critical stage of development. The participants in the S market are becoming more and more diversified, and investors are full of expectations for the investment value of S funds. It is expected that in the future, there will be more excellent investment institutions and investors to participate in S trading, and the future growth trend of the S trading market is significant.
S trading will welcome new growth, and the future growth trend is significant
According to professional statistics, the annual trading volume of the S market in 2023 will be 72.334 billion yuan, although it fluctuates slightly, but considering that a large number of funds registered from 2015 to 2017 will gradually mature from 2025, there will be a large number of funds facing exit needs from 2025 to 2027. According to relevant data, there will be 171 funds in the exit period in 2023 alone (see the chart below), and the funds in the exit period and postponement will continue to grow, and the S trading market will also usher in new growth.
In addition, judging from the transaction data of S funds in Beijing Equity Exchange Center, Shanghai Equity Custody and Trading Center, Guangdong Equity Exchange Center, etc., the overall trend is on the rise, and it is expected to continue to grow in the future.
S fund transaction data of the Beijing Equity Exchange Center: By the end of 2023, the Beijing Equity Exchange Center has launched a total of 91 fund share transfers, with a transaction amount of 5.931 billion yuan. Compared with 2022, the number of fund share transfers in Beijing in 2023 has increased by 54%, reflecting the overall demand for share transfers.
S fund transaction data of Shanghai Equity Custody and Trading Center: As of the end of December 2023, a total of 89 angel, venture capital, and PE fund shares (including share portfolios) have been launched on the Shanghai S Fund trading platform, covering various types such as central enterprises, local state-owned enterprises, government guidance funds, financial institutions, and foreign funds.
S fund transaction data of Guangdong Equity Exchange Center: As of October 2023, Guangdong Equity Exchange Center has launched 10 fund share transfers, with a total of 2.173 billion fund shares. (Part of the data source: Zhizhong ZERONE, Shangguan Law)
China's S market is becoming increasingly hot, and high-quality assets are increasing
In the past two years, the Chinese market has paid more and more attention to S funds, and many domestic and foreign capitals are paying attention to the investment logic and investment returns of S funds. In the context of the increasingly hot S market, high-quality assets continue to increase, and relevant support policies for S funds are also being introduced one after another:
In January 2024, Shanghai issued the "Several Measures on Further Promoting the High-quality Development of Shanghai's Equity Investment Industry", mentioning that it will vigorously promote the development of S funds, specifically covering policy support for the new establishment (relocation) and operation of S funds;
In December 2023, the relevant departments of Zhejiang Province issued the "Notice on Promoting the Pilot Guiding Opinions on Equity Investment and Venture Capital Share Transfer", and with Hangzhou and Ningbo as the core pilot cities, Zhejiang became the third regional equity market in the country to carry out the pilot construction of equity investment and venture capital share transfer.
In the Chinese market, many domestic and foreign capital have been in contact with state-owned assets in the past few years, because S assets are becoming more and more concerned in China, more and more people want to participate, and local funding institutions are gradually learning about S funds.
It is reported that asset pricing is one of the most complex aspects of S transactions, so the adoption of a market-oriented approach to determine the final transfer price in the Guiding Opinions is very critical for state-owned assets and other related capital......
A number of experts are optimistic about the S market, and Baoli professional services are empowered
According to industry analysis, for a long time in the future, the exit pressure of private equity funds will remain at a high level, and S transaction will be an important tool to release the exit pressure of private equity funds, and it is also an asset allocation strategy for investors to obtain high-quality returns. Many industry experts have given professional judgments:
The director of the trading business department of the Shanghai Equity Custody and Trading Center said that the current S market in the mainland is still in its infancy, but the policy support is continuing to increase. In 2023, the trading platforms in Zhejiang and Guangdong provinces will be approved for establishment, and together with the two existing trading platforms in Beijing and Shanghai, there are currently 5 equity trading centers in 4 provinces in China that have become intermediate platforms for S trading.
A well-known capital management partner said that from the practical perspective of S fund, the fund should first formulate the strategy of S investment and clarify the positioning, objectives and strategy of S share. After that, the S fund team needs to cover a large number of high-quality GPs in the market, and maintain close interaction with mainstream GPs and LPs to learn as much about potential opportunities as possible. The team needs to conduct in-depth due diligence on the portfolio and GPs, and have a full judgment on the development and exit expectations of projects across industries and stages.
Well-known investment experts in the industry said that at present, it is particularly important to activate and build the ecological chain of S funds, and it is necessary to clarify the trading needs of stock assets and relatively comprehensive investment attributes, so that S funds have the foundation to establish unique products and industry ecology.
Industry experts said that for S transactions in the Chinese market, the annual trading volume in 2024 is considerable, many institutions are actively promoting the pace of investment, and the definition of high-quality assets is also constantly changing, and investors have confidence in expanding and deepening S transactions in the Chinese market.
As a professional investment service company, Baoli Investment is participating in the investment of S funds in different forms to provide diversified asset allocation services for our customers. In the future, with the new regulations on asset management and the continuous promotion of the government, more financial institutions will enter the market and accelerate the layout of the S market, and the market prospects are broad.