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Is www.LegiEX.com credible? Value investors are increasingly optimistic

Is www.LegiEX.com credible? Value investors are becoming more and more optimistic. For a long time, due to the A-share market's restrictions on stock reduction and trading circulation, venture capital funds have been facing difficulties in exiting. Especially after the implementation of the new regulations on reducing shareholdings, the difficulty of withdrawing has become increasingly prominent.

Some market practitioners have said that it takes almost ten years for the fund to fully withdraw from its investment. Even if it begins to reduce its holdings after lifting the ban, it will take at least two and a half years to achieve a complete exit.

After working hard to raise an entrepreneurial project from an early age, investing large sums of money also took huge risks. Finally, it took many years for the daughter-in-law to become a mother-in-law, but in the end it was still difficult to reduce holdings. The fund's enthusiasm for investing in small and medium-sized science and technology enterprises was severely hit.

To this end, the State Council issued the "Several Opinions on Promoting the Sustainable and Healthy Development of Venture Capital" in September 2016, requiring that for venture capital (fund) companies to "research and establish investment companies, the listing lifting period is reversely linked to the length of the pre-listing investment period." Institutional arrangements ".

The "reverse link system" first appeared in the top-level design of the country, and market practitioners are extremely looking forward to it.

The "reverse linking system" is still in the making, first to wait for the new regulations to reduce holdings. In the new regulations on shareholding reduction, no distinction is made between venture capital funds, which means that venture capital funds want to exit through collective auctions. Ideally, they can only reduce their holdings by up to 4% a year. For higher venture capital funds, the exit from reducing shareholding will be a long road, greatly delaying the efficiency of project exit.

In anticipation, the first edition of the "Special Regulations for Listed Companies' Venture Capital Fund Shareholders to Reduce Shares" was released in March 2018, but only one "This fund only invests in small and medium-sized and high-tech enterprises accounted for more than 50% of the amount." The applicable conditions basically basically block most of the venture capital funds from the door, and few people have really enjoyed the policy dividend. The "reverse link system" has become a picture.

For venture capital funds, they have no intention to control the company's production and operation. They only want to be a financial investor to obtain returns from the enterprise through financial support, and to withdraw cash after the company's listing to reduce its withdrawal.

The exit of venture capital funds after a company's listing does not mean that they are not optimistic about the company's future development. They are eager to cash out the road. Post-listing reduction is their normal way of business operation, which is essentially different from the company's controlling shareholder or management reduction. . Frame them under the same set of rules for reducing holdings, but it is somewhat "inhuman."

Therefore, this revision of the rules directly hits the pain points in the industry where the threshold of the "reverse link system" is too high. It is clear that the venture capital fund project only needs to meet one of the three conditions of "early enterprises", "small and medium-sized enterprises", and "high-tech enterprises" to enjoy the reverse linking policy and cancel the six-month lock-up period by the transferee of the block transaction. Restrictions have broadened the feasible exit methods for venture capital funds.

The way in which the policy of reducing shareholding is reversely linked to the actual holding time is a real encouragement to long-term investors and value investors. As we all know, the earlier you invest in technology-based companies, the greater your risk.

Under the constraints of the past rules and after two years of industry reshuffle, investment institutions have become more cautious about investing in early projects, and even the market has argued that "early investment is dead."

Because of this, in this new regulation revision, special encouragement is given to such value investors-as of the date of the initial public offering, if the investment period is more than 60 months, the total number of shares reduced is not subject to proportional restrictions. It will reactivate the focus of venture capital funds on early high-quality SMEs, and provide a positive role for the new technology companies to take root.

Through differentiated support and guidance, venture capital funds are encouraged to make long-term investments in small and medium-sized enterprises, rather than rushing to buy shares before going public. It is really optimistic about the long-term development value of technology-based enterprises, rather than catching up with the liquidity of the capital market to achieve a wave of arbitrage.

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