The cold winter of the first and second markets hit the small and medium-sized PE funds to "change faces" to survive (VC334)

Most of the current financing companies are asking too much, and the price-earnings ratio of the primary market has not dropped significantly due to the continued downturn in the secondary market since 2011.

Due to the high price-earnings ratio of the primary market and the lack of improvement in the secondary market, the private equity (PE) market is about to usher in a new round of reshuffle. It is learned that in this environment, some PE agency managers have begun to plan a "face-changing" survival plan, intending to transform their role from manager (GP) to investor (LP).

Chen Feng, general manager of Guangdong Hengfeng Investment, said recently that the company is currently operating in difficulties, and partners are planning to transform around the Spring Festival from an investment fund to a fund of funds (FOF). At present, some projects of the company also intend to seek external cooperation. The model is that the company provides project resources and seeks to form a partnership enterprise with a large PE institution. The company becomes an LP in a partnership enterprise. "This move will not only diminish the project's resource income, but also increase the bargaining chips in the dialogue with the proposed listed company because of the introduction of large institutional funds." Chen Feng said.

Chen Feng said that most of the current financing companies are asking too much, and the price-earnings ratio of the primary market has not declined significantly due to the continued downturn in the secondary market since 2011; however, the uncertainty of the secondary market has increased the risk of PE investment .

Chen Wei, chairman of Shenzhen Oriental Fuhai, believes that as PE companies gradually become more specialized, the PE market is also evolving, and there will definitely be a reshuffle process. In this case, if small and medium PEs continue to have no projects to invest in, it is also a good choice to transform into LP of some brand PEs.

The 2012 PE industry development trend forecast report also believes that the reshuffle of PE institutions will accelerate in 2012 and the industry concentration will increase. The process of reshuffling will bring more tradable assets, so inter-sale resale will become an important channel for inter-institutional exit and investment opportunities.

Considering the current global macroeconomic trends, the chances of a sharp recovery in the capital market in 2012 are small. Correspondingly, a large number of PE funds established in the "National PE" boom around 2009 are gradually entering the exit period, and the entire PE industry will be Facing huge exit and return pressure. It is expected that PE institutions that do not achieve the expected returns will be at a disadvantage in market competition, and that fund-raising and investment will face challenges, and even face market elimination; and mature institutions with high professional level and pre-financing will be better able to cope Industry adjustment, calmly out of the "winter", when the concentration of China's PE industry will be further improved.