Researchers 丨 Wang Yuanyuan, Wang Tingting
Editor 丨 Lin MM Liu Xueying
Interior design 丨 Zhang Jiajun
In 2021, the public offering industry is changing.
Since the Spring Festival, the market has interpreted the structural market to the extreme, the major rankings have changed frequently, and the performance of some star funds has been greatly adjusted, and even the performance of the market index in the same period has not been able to run.
At the same time, the scale of public funds continues to grow, once breaking the record for 5 consecutive months, and once exceeded 24 trillion yuan.
According to the data on the website of the Asset Management Association of China, as of October 26, 2021, there were 151 co-owned fund management companies in China, and the net asset value of public funds under management totaled 23.90 trillion yuan.
Opportunities and challenges coexist, and the choice of the industry's top leaders has also diverged.
Recently, Xingquan Fund officially issued an announcement that Dong Chengfei stepped down as fund manager, and its Xingquan Trend Fund hired Xie Zhiyu and Dong Li as fund managers, and co-managed with the original fund manager Tong Lan; Xingxin Vision Fund was taken over by housewarming.
Dong Chengfei is known for his steady investment style and is known as "Guo Jing in the fund industry". According to public data, Dong Chengfei has been in the industry for 18 years, served as a fund manager for nearly 15 years, and won 24 fund awards during his tenure.
For his "next stop", the mainstream speculation in the market is "running privately". The so-called "private", that is, to run to private placement.
At the same time, there are also public fundraising bigwigs who are eager to fight in the public fundraising jianghu in the form of "entrepreneurship".
At the end of September, the application for the establishment of the "individual" public fund company Quanguo Fund received feedback from the CSRC. Among them, Wang Guobin, former chairman of Dongfanghong Asset Management (now "Orient Securities Asset Management"), and Ren Li, former general manager of Orient Securities Asset Management, two influential figures in the asset management industry, appeared in the list of shareholders, causing market concern.
This is actually a process of Wang Guobin's public to private and then back to the public.
In 2016, Wang Guobin left the position of chairman of DongfangHong Asset Management and founded the private equity investment fund Junhe Capital. Today, 5 years later, he cooperated with Ren Li, who left the post of general manager of Orient Securities Asset Management, to establish Quanguo Fund.
Wang Guobin is not alone!
Following the private placement, the "personal department" public offering has become a new position for the star-level bigwig to "start again" after leaving the old owner.
For example, Chen Guangming and Fu Pengbo of Ruiyuan Fund can be called the benchmark figures of domestic value investment; Fan Yonghong of Pengyang Fund, who single-handedly founded Huaxia Fund, has always had the reputation of "godfather of the industry" in the industry.
According to the data, the "individual department" public offering that began in 2015 has been approved for 23 establishments so far (as of October 26). In addition to Shangzheng Fund, Yimi Fund and Xinghe Fund, which have not yet issued products after their establishment last year, the total assets of the remaining 20 "individual" public fund companies have reached 459.655 billion yuan.
However, the industry competition is fierce, "individual department" public offering, although the industry big guys gathered, is still facing a pattern of individual differentiation in development.
Judging from the indicator of management scale alone, among the 23 "individual" public offerings, the scale of management has reached 100 billion, and the scale of management of some people is less than 100 million.
In this report, we will focus on the "individual department" public offering, and try to explore the common characteristics that cause the "individual system" public offering differentiation pattern in the comparison with the development law of private placement.
A new frontier for entrepreneurship
In December 2013, the State Council formally approved the "Csrc's Request for Instructions on Issues Related to the Management of Fund Management Companies of Publicly Offered Funds", which for the first time clearly stipulates that eligible natural persons can apply for the establishment of public securities investment fund management companies as major shareholders.
In June 2014, the Csrc issued the Opinions on Vigorously Promoting the Innovative Development of the Securities Investment Fund Industry, and professionals were clearly encouraged to set up fund management companies.
In February 2015, Hongde Fund obtained the approval of the Csrc and approved the establishment of a fund management company.
At the beginning of its establishment, the registered capital of the company was 120 million yuan, and Wang Dexiao held 26% of the shares as the major shareholder of natural persons; after a round of equity changes in 2018, the registered capital of Hongde Fund increased to 143 million yuan, and Wang Dexiao's shareholding rose to 45.7% through direct and indirect means.
Hongde Fund has opened the curtain of "individual department" public offering, and Wang Dexiao's professional experience has also become a typical sample.
According to public information, Wang Dexiao was once the vice chairman of Sunshine Insurance, the chairman and general manager of Sunshine Asset Management. In the year of the establishment of the Hongde Fund, he had reached the age of "knowing the destiny of heaven".
After this, more industry leaders focused on the "personal department" public offering. According to public data, from 2015 to 2021, the number of approved individual public offerings each year is: 1, 2, 5, 8, 1, 5 and 1.
Judging from the background of the founders/general managers, the founding core figures of these 23 public offerings are mostly from well-known large-scale public funds in the market, but there are still some cross-bank practitioners. In addition to the above-mentioned Wang Dexiao, there are:
Tang Huang, the major shareholder of The Hive Fund, and Chen Shiyong, general manager, were both from the headquarters of the amateur bank's financial market department;
Ma Junsheng, general manager of Tongtai Fund, was previously the president and major shareholder of Huatai United Securities, Liu Wencan, who worked in the finance, human resources and audit department of Huaxia Fund;
Minya Fund's majority shareholder, Li Zhengqing, has worked in international financial institutions and foreign hedge funds, while General Manager Xu Dai has worked in banks and private equity funds.
Before the Hongde Fund, if the industry tycoons with similar experience chose to "re-start a business", most of them would join the private equity.
The most typical example is Wang Yawei, the former "first brother of public funds". Public data shows that during the period from 2005 to 2012, the total return of Huaxia Large Market Selection during Wang Yawei's tenure was as high as 1198%. However, in 2012, Wang Yawei, who was at his peak, resolutely left Huaxia Fund and "ran privately" to create his own private equity company, Qianhe Capital.
So as the choice of "re-entrepreneurship" of industry leaders, what are the similarities and differences between the development of individual public offerings and private placements?
Public offering or private placement
From the perspective of institutional factions, the current management institutions of public funds in the whole market can be divided into: securities companies, trusts, insurances, individuals, etc. according to their shareholder backgrounds. According to public data, as of October 26, 2021, there were 151 domestic fund management companies in China, including 67 securities companies, 22 trust departments, 23 individual departments, 15 banking departments, and 6 insurance departments.
Traditional institutional systems (such as banking, brokerage, and insurance) are still the main force in the industry.
They have the support of institutional shareholders and have a natural advantage in channel resources and capital resources. At the same time, such public offerings will occasionally cause contradictions between shareholders and management, or due to the rigidity of the company's institutional mechanism, resulting in the outflow of outstanding talents.
In this regard, the new Fund Law promulgated in 2013 stipulates that public funds can implement a shareholding plan for professional managers, clearly encourage fund companies to carry out equity incentives, and equity changes of less than 5% do not require approval.
The Fund Law is intended to encourage fund companies to retain outstanding talents through equity incentives, especially experienced fund managers. According to incomplete statistics from the media, the number of fund companies that have implemented equity incentives has exceeded 30 so far.
However, equity incentives are not a "panacea", and the lack of a sense of belonging and participation in the company has made many people still choose to leave in the end.
In contrast, the relatively flat ownership system of "individual" public and private offerings and the deep binding of interests with core members make it the main consideration direction for financial talents to start a business.
It is worth noting that although private placements and individual public offerings are the same, there are still differences, which has also become the focus of our analysis:
1. Similarity: Take the founder as the core of development
The development direction of the "individual department" public offering is closely related to the background of the core founders
A distinctive feature is that the bond management scale of the founders of the insurance/banking system is relatively large, and the stock management of the founders of the public offering department is relatively large.
Among the 23 core founders of individual public offerings, 2 founders have insurance backgrounds and 2 founders have banking backgrounds, which brings them a large bond fund management scale.
Because insurance and banks have always invested a large amount of money, invested more in bond-based products in the traditional sense, and some of these founders are also from the investment director of the fixed income department, so their personal experience of investing in bonds has also been brought to the public funds founded.
This is similar to entrepreneurial private placement.
Wang Dexiao, the founder of the aforementioned Hongde Fund, has many years of experience in the insurance industry, so the Hongde Fund accounts for a certain proportion of bond funds in the management fund. As of October 26, the non-monetary fund size of Hongde Fund was 117.098 billion yuan, of which the bond fund size was 21.709 billion yuan.
Yang Aibin, the general manager of Pengyang Fund, worked as a loan officer at Shanghai Pudong Development Bank, then as a bond researcher and deputy general manager of the portfolio management department of Ping An Insurance, and later joined Huaxia Fund as a fixed income director. As of October 26, the size of non-monetary funds managed by Pengyang Fund was 85.856 billion, of which the size of bond funds was 45.403 billion.
The most obvious of this trait is actually the Hive Fund. Founder Tang Huang was the general manager of the financial market department of Guangfa Bank, the founder Chen Shiyong has worked in Xiamen International Bank and Industrial Bank, and when he was in Industrial Bank, he once served as vice president of financial market headquarters, general manager of capital operation center and general manager of interbank business department. This resulted in the entire managed size of the Hive Fund being 28.158 billion yuan, but 28.141 billion yuan was a bond fund.
Xu Dai, one of the founders of Minya Fund, also worked at China CITIC Bank. However, the company's total management scale is only 52 million yuan, and it is currently a hybrid fund product.
Chen Guangming, who is well known for investing in stocks, founded the Ruiyuan Fund, needless to say, its total management scale is 53.732 billion, all of which are hybrid funds.
After the bull market, "startup" funds have more opportunities
At present, of all 23 individual public offerings in the market, the time for their approval to exhibit is concentrated in 2018, and a total of 8 individuals have obtained regulatory approval in this year and can start their public offering business. (As the approval date is generally earlier than the fund establishment date, the approval date is used as an indicator)
The time of the establishment of these public funds follows the entrepreneurial law of private funds - after a bull market, many public fund managers run to private placements with impressive performance to attract investors and raise funds.
The actual results of the operation also more or less prove the effectiveness of this strategy.
Although the market performance in 2018 was not good, after the big fall in 2015, from the beginning of 2016 to 2017, the market had a period of upward movement, and some fund managers took advantage of this wave of market to obtain good returns, which will become their personal marketing story.
Whether the investment research team holds a controlling stake may affect the stability of the institution
Another of our findings is that in funds larger than 10 billion, the general manager and major shareholder of the company tend to be the same person; in smaller companies, the general manager and the major shareholder are more likely to be not the same person and belong to the "partnership".
Because in the entrepreneurial private equity and public offering, the core investment research figures often play one of the above roles (general manager or major shareholder), not all of them control the startup company, so we are very concerned about - whether the investment research team controls - the investment research team controls the entrepreneurial public offering/private placement, and its team development seems to be more stable, and it is easier to make the management scale larger and achieve greater development.
For example, Ruiyuan Fund, the general manager and major shareholder are Chen Guangming, is a typical investment research team holding; in the Bodao Fund, Mo Taishan, who has investment and research experience, is the major shareholder, and Shen Bin, who has market sales experience, is the general manager, which is a typical investment research holding partnership venture fund; in the Hengyue Fund, Huang Xiaojian, who has investment research experience, is the general manager, and Li Shujun, who has been a CFO in continuous entrepreneurship and has served as a CFO in an entertainment company, is the major shareholder, which is a typical investment research partnership venture fund.
Although there are only 23 individual public offerings in the market at present, and there are few sample cases, the above findings are consistent with the views of some people in the industry who study private equity funds.
The person in charge of the introduction of private equity products of securities companies said: "Under normal circumstances, there will be certain risks if the core figures of investment research do not hold shares. Because in a private equity fund, the funds are all looking for the investment and research capabilities of the core investment manager to buy its products, so the stability of the core investment manager is very important for a private placement. If the scale of the private equity fund becomes larger, but the core investment manager does not have a controlling stake, it may have a feeling of uneven distribution of benefits in the future, and finally affect the stability of the institution. The person in charge said that the recent incident of Narushi investment is a very typical case.
In the individual public offering, the negative impact of this situation will be weakened, because some of the founders of the public offering do not even have investment research experience, and the core founder is the marketing/sales background.
However, in the early stage of entrepreneurship, to make a name for itself in the market, an excellent investment research team is still the best selling point. Founders with a marketing background still need to bring in an investment research team or fund manager with a certain degree of visibility, and may give the latter enough voice.
Such an approach is not completely worry-free. Founders of startups are often prone to conflict at a certain stage of development, and even the founders may clash with the investment research team that gives them enough voice.
For example, Wu Chuanyan, the star fund manager of Hongde Fund, joined the company since the beginning of the establishment of Hongde Fund in 2015, and after recently "being" co-managed a fund, he dared to harden the company, which once plunged the company into negative public opinion.
2. Differences: Investment research capabilities and marketing/sales/resource integration are equally divided
The direction of the head of public offering marketing to the sea
Among all the individual public offering founders, we found an interesting phenomenon - many founders have previously worked as sales/marketing/marketing directors in large fund companies.
Among the 23 individual public offerings, 10 of the core founders of the public offerings come from well-known public offerings marketing/sales positions, accounting for half of the number of founders from all public offerings. Some of these 10 companies are founding team combinations of investment research + marketing/sales, and some are founders of pure marketing/sales.
This is a significant difference between individual public and private funds.
Generally speaking, the core founders of private equity funds must have very strong investment capabilities, because private equity funds cannot do marketing to all market investors without distinction, and their usual minimum purchase threshold of 1 million yuan determines that the source of funds of private equity funds is high-net-worth customers with strong connections or stickiness.
High-net-worth clients with millions of investable funds often value the investment ability of private equity managers/the ability to obtain excess returns, focusing on the investment manager itself, which is a stronger sticky trust.
However, this is not the case for public funds, which are facing a wider range of investors in the market who may not have investment experience and basic knowledge, so marketing and sales are very important in the large-scale development of public funds. Although the marketing strategies of public funds in recent years are often intended to create star fund managers and strengthen the trust between individual investors and fund managers, this is still a large-scale marketing method.
This explains why there are so many marketing/sales leaders among individual public offering entrepreneurs – for them, marketing experience in public offerings can also be brought to the public offering.
At present, these marketing/sales backgrounds of individuals in the public offering, do better are: Huian Fund, Zhonggeng Fund, Huisheng Fund, Chunhou Fund, Bodao Fund 5 companies, their fund management scale has reached more than 10 billion, respectively: 39.019 billion, 24.923 billion, 24.820 billion, 23.223 billion, 19.622 billion.
Among all the individual public offerings, there are only 11 funds with a scale of more than 10 billion, and the founders with marketing/sales backgrounds account for half of the country, which can almost be regarded as very successful.
The above five companies were established in April 2016, November 2015, September 2018, November 2018 and June 2017.
Such achievements are undoubtedly the envy of private equity entrepreneurs - the longest is only 5 years, the shortest is only 3 years, and these "startups" have ranked among the tens of billions.
In addition, in the above 5 tens of billions of individual public offerings, in addition to the core founding team of Bodao Fund is a combination of "investment research + sales" - the company's general manager Shen Bin has served as the sales director of BOCOM Schroders and the director of Chongyang investment market, and the company's major shareholder Mo Taishan was the general manager of BOCOM Schroders, the president of Chongyang Investment, and won 4 "Golden Bull Award" honors - the founders of the other 4 public offerings are pure marketing/sales background.
For example, He Bin, the major shareholder of Huian Fund, was once the deputy general manager of Jianxin Fund, in charge of marketing, back-office operations and product innovation, while General Manager Liu Qiang had previously served as the CFO of Honeywell and Artwell (China), with almost no financial institution background.
Zhang Jinfeng of Huisheng Fund, who previously served as the executive director and administrative head of the Internet finance department in Huaxia Fund; Xing Yuan, of Chunhou Fund, served as the deputy director and director of channel/marketing departments in Huatai Berry Fund and Caitong Fund; Meng Hui of Zhonggeng Fund, who previously served as regional sales director and deputy sales director of Minsheng Securities and Guojin Securities, and later served as deputy general manager of Haifutong.
The chairman and general manager of the concentrated entrepreneurial direction
Another significant feature of the existing individual public offering is that the core founders are almost all in fund companies, securities companies, asset management companies, banks, insurance and other institutions, working in senior positions such as chairman, general manager, assistant general manager and so on.
For example, the Quanguo Fund, which has attracted market attention this time, the most concerned among the founding shareholders are Wang Guobin, former chairman of Dongfanghong Asset Management (now "Orient Securities Asset Management"), and Ren Li, former general manager of Orient Securities Asset Management.
Of the 23 individuals in our statistics, a total of 14 founders have previously held senior management positions in well-known companies.
This is also a significant difference from private equity funds.
Because the customers of private equity funds are more "looking at people", the investment and research ability of core founders is very important, so many well-known private equity founders in the market have previously been star fund managers. These fund managers did not necessarily hold administrative positions in the previous company, as long as the performance was good enough and stable enough, there was enough appeal in the market to raise funds, so it was easy to start a business.
However, the individual public offering is still like the traditional public offering, which requires the blessing of marketing, so the founder's management ability, resource appeal, and even the ability to introduce large funds such as insurance are very important. This may be the reason why the chairman and general manager are keen to devote themselves to starting a business here.
The change of survival
At present, there are 23 "individual" public funds in the whole market, a total of 269 private equity products and 264 public offering products have been issued, and the corresponding investment managers under management are 74 and 99 respectively. In fact, the management scale of fund companies in our aforementioned statistics is calculated by the public offering products it manages. Since the information of private placement products is not public, we are not yet able to count the management scale of all private placement products.
Among the 23 individual public offerings we counted, except for 11 institutions with a management scale of more than 10 billion yuan, and Shangzheng, Yimi, and Xinghe, which have not yet issued public offering products, the remaining management scale is mostly below 2 billion.
It is not difficult to understand such a situation. The founders of most institutions do have a good reputation in the industry, but entrepreneurship is all about starting over. In the same stage competition with the traditional institutional public offering, it is still very difficult to win the reputation and market recognition of the majority of basic people.
In addition, the "individual" public offering has always been a platform-type company, in which the fund managers have greater differences in investment capabilities, which are also more differentiated in terms of specific product performance.
For example, the Oriental Alpha Fund, with its highest annualized return, Oriental Alpha Advantage Industry A, had an annualized return of 99.20% as of October 27, but its oriental alpha Zhaoyang C, which had the lowest annualized return, had an annualized return of -12.83% as of October 27.
Hengyue Fund also has a situation where the performance of its products is more differentiated, and it is even more "outrageous". As of October 27, Hengyue Advantage Select, which has the highest annualized return, has an annualized return of 77.54%, while Hengyue Quality Life, which has the lowest annualized return, has an annualized return of -48.41%.
The fund managers of the above two funds are Ye Jia. Prior to joining Hengyue Fund, Ye Jia worked in Yinhua Fund, Shenwan Hongyuan Securities Asset Management Department and East Asia Qianhai Securities Asset Management Department, and her past experience was mainly in investing in bonds. But when I arrived at Hengyue Fund, I served as a fund manager for a number of hybrid funds and began to manage stocks! It's no wonder the annualized return gap between the two hybrid funds it manages is so large!
The probability of such a situation in the traditional established public funds in the market is extremely low.
But even in the case of fund managers with such bond experience managing stocks, Hengyue Fund, which was established in 2017, has now managed more than 10 billion non-monetary funds. This shows that for investors, investing in "personal" public offerings, it is still necessary to maintain sufficient vigilance and identification ability. The newly created public fund will inevitably be weaker than the existing public fund in terms of team personnel. In the public offering, a complete investment research team, a middle and back office team can allow them to allocate enough manpower in specific businesses, while "startups" are likely to have a situation where one person "wears multiple jobs".
In addition, the former investment masters, after the establishment of the public offering, their product performance may not necessarily repeat their past glory.
At present, the largest number of public offerings are issued by Pengyang Fund, with a total of 53 public offerings (A/C shares are not calculated separately), with a total scale of 86.562 billion.
From the perspective of categories, bond funds accounted for half of the country with a scale of 45.403 billion, while equity funds were only 4.135 billion yuan and hybrid funds were 36.318 billion yuan.
In terms of performance, among the 22 bond-based products that have been issued, the top performer is Pengyang Huili A/C, with a total asset size of 6.6 billion yuan, and the current fund managers are Yang Aibin and Jiao Cui. Pengyang Huili A has yielded 4.14% this year (as of October 27). The above performance is not impressive. After all, the average yield of hybrid bond secondary funds has been 5.25% so far this year.
Where is the road
The spark is burning, and the "personal department" public offering is becoming a force to be reckoned with in the industry.
Behind the approval of 23 institutions is the rise of the trend of self-reliance and self-promotion of the industry tycoons.
Compared with traditional public offering institutions, individual public offerings rely more on the founder's own resources and influence in the industry.
Those big guys who dare to come out and start a business have actually proved their past success to some extent.
It's just that starting a business is not easy, and the reality is bone. At present, the individual department is a public fundraiser, and due to the short period of establishment, the general scale is still relatively small. In addition, most institutions still rely on the performance halo of the previous management products to raise funds, and the performance of the newly established public fund products is not very outstanding in the same category, lacking the momentum of "overnight popularity" of private equity products.
On the other hand, for investors, although the emergence of individual public offerings enriches the targets that can be selected, it needs to be more cautious when choosing.
Choosing a fund is not just about choosing a fund manager. The execution of any investment philosophy and investment management depends on people, and the strength of the team's professional ability is also an important determinant of the fund's performance.
In other words, the personal ability of the fund manager is very important, and the comprehensive strength of the fund company in investment research and risk control is equally important.
As a start-up company, the "individual department" public offering does not rule out that there is a gap in the comprehensive strength of investment research and risk control, which has then become an important reason for its development.
In 2018, Wang Dexiao said when talking about the development plan of Hongde Fund, "Our positioning is not to meet the needs of everyone, nor to lay out a large and comprehensive product line to cater to the market." ”
It can be seen that for the newly established public offering, if you want to compete in the entire large industry, in addition to the influence accumulated by the founders, institutions must also choose a distinctive power track for themselves - to brand in the minds of investors, which is a clever way to break through and grow.
This issue is edited by Xueying Liu