Interpretation of China’s private equity market

    Zhang Huaquan (left) and Bao Jingming

    In 2018, a great number of new regulations of the private equity market were released one after another. “[In terms of the regulation of China’s securities investments] what remains unchanged is the constant change,” said Wang Yang, a partner at Guantao Law Firm during CBLJ Forum 2019 in Beijing.

    Wang Yang

    On the topic of “Market trend analysis of PE funds and equity investment”, Wang and Chen Xiaochuang, partners at Guantao Law Firm, Bao Jingming, the general manager of General Technology Venture Capital, Sun Yonggang, a partner at Zriver Capital, Zhang Huaquan, the legal director at CSTF Fund Management and Zhu Ke, director and deputy general manager of Guiyang Venture Capital, all participated in the discussion.

    According to Wang, the buzzword of the equity investment market is “returning to rationality”; and the “80/20 rule”, which illustrates 20% funds occupy 80% capital, will become ever more prominent. Bao Jingming agrees with Wang’s point of view. He believes that for any market or group, once competition kicks in, or the market develops to a certain stage, the 80/20 rule will naturally take hold, and this poses a challenge to fund management. “The key issue lies in how to find your core competence and how to position your own funds. It hinges on the capability of every management institution,” he said.

    Zhang pointed out that the development model and performance of China’s private equity market and real estate market have something in common. The difference is that what cost the real estate market nearly two decades to develop into scale took the country’s private equity funds less than half of the time. “For private equity funds, fundraising is the key, but investment rules,” he said.

    Drawing on his own experience as an arbitrator, Sun said that since the end of last year, disputes in the field of equity investment have increased dramatically. Arbitration is a suitable choice for resolving such disputes as it respects the autonomy of the parties.

    The media coverage on the roundtable conference is organized based on shorthand transcripts. Any remarks by the guest speakers and scholars represent their own opinions, and not the opinions of the organizations to which they belong. Read the full report of the CBLJ Forum 2019 here.