 Private equity forum a grand financing feast
By Wang Yi (China Daily)
Updated: 2008-09-27 09:26 The 2nd China International Private Equity Forum (CIPEF) was held in June 2008 in Tianjin. About 2,000 domestic outstanding enterprises and 500 international private equity fund companies attended the event. CIPEF is approved by the State Council and sponsored by Tianjin Municipal People's Government, All China Federation of Industry & Commerce, and the Association for Corporate Growth (ACG). It has borrowed ACG's pattern of "capital connection" and "speed dating", to set up a financing bridge for attendees. Financial insiders say CIPEF is a beneficial trial in the construction of China's multi-layer capital market system. Generally a multi-layer capital market consists of the main board, the second-board and the third-board market so as to provide enterprises of different layers of different security transacting platforms. At present China's main board market is being perfected, and the growth of the enterprise market is stepping onto the stage of planning and seeking proposals. Accounting for about 99 percent of China's current enterprises, small and medium-sized enterprises (SMEs) generate 60 percent of the country's gross industrial output value and are responsible for the payment of 40 percent of taxes. They also provide employment opportunities for 75 percent of the entire labor force. But despite the important role they are playing, SMEs are facing more and more difficult financing situations as a result of the credit crunch and an unsound multi-layer capital market system. As the financing difficulties of SMEs are partly caused by the lack of financing channels, private equity funds bring these enterprises an opportunity to raise capital directly. Private equity funds fill the gap of market demand and bank loans, bringing a concept in financing. Listed and non-listed companies Moreover, there are less than 2,000 listed companies among hundreds of thousands of Chinese enterprises. Large quantities of non-listed companies which have no formal off-board transacting platforms have to transfer stocks by auction or restructuring. As a result, the transaction of shares and property rights becomes dormant. For the above reasons, developing a private equity fund is significant to the construction of China's multi-layer capital market system. Unlike traditional securities funds, private equity funds pay more attention to the cultivation of resources to be listed. One of the features of the second CIPEF was the attendance of some newly formed RMB private equity funds from Beijing, Shanghai and Tianjin. Over 40 of them were from Tianjin. In over one year's time, the exposure rate of RMB private equity funds and industry investment funds has increased. Beginning with the construction of Bohai Industrial Investment Fund, a boom has taken place in the establishment of industry investment funds across China, represented by the building of regional industry funds in Guangdong and Suzhou. (China Daily 09/25/2008 page14) |
