Xie Jianhua, deputy director of Beijing Financial Office, Zhao Linghuan and He Xiaofeng, vice chairmen of China Equity Investment Fund Association, and Xiong Yan, vice chairman of China Equity Investment Fund Association and secretary-general of Beijing Private Equity Association were present at the new release, briefing the background and preparatory work on the holding of the forum, and having exchanges and dialogues with the correspondent with regard to the international financial situation facing the PE industry and this industry’s development in Beijing. More than 40 news media from home and abroad attended the news release.
Attachment:
Global PE associations gather in Beijing
Following the successful holding of the 2008 Beijing Global PE Forum, the 2009 Beijing Global PE Forum will be held at China World Hotel Nov.8-9, 2009, still jointly sponsored by Beijing Financial Office, Beijing Private Equity Association, China Equity Investment Fund Association (preparatory) and Emerging Markets Private Equity Association (EMPEA).
A year ago, the U.S. sub-prime crisis triggered the breakout of the financial crisis, and the crisis quickly spread, leading to the global economic downturn. After more than a year, the world economy gradually show the signs of recovery, but the international financial crisis, rare in history, is still spreading from local to global, from developed to developing countries, from the financial sector to the real economy, with the force of impact and coverage reaching beyond the expectations of many economists. Over the past year, in the face of this crisis, various countries in the world worked to enhance common understanding and cooperation to overcome the difficulty. Last November, Leaders of G20 Financial Market and World Economic Summit was held in Washington, at which various leaders had in-depth discussion on strengthening macroeconomic policy coordination, reinforcing international financial regulation, stabilizing international financial market, and reforming international financial institutions and other major issues, and agreed to take action so as to make positive efforts and contributions to the early recovery of the world economy. China’s firm performance in the crisis is regarded as the hope for the world economy to step out of the quagmire.
From an international investor's point of view, foreign investment in China in the past was mainly the establishment of joint ventures or wholly-owned enterprises, but after years of development, China's economic situation and investment environment have witnessed great changes, and the investable fields have been further expanded, being the most important reason to attract international private equity investment funds to operate in China.
Equity investment fund is one of the most important means to solve the direct financing difficulties of SMEs, and an important means to optimize the allocation of resources on the capital market. In addition, after 20 years of development, China has witnessed the gradual deepening of economic restructuring, and China, as an economy in transition has many problems compared with developed countries, for instance, many companies are not doing well in adapting to the market economy, long-term stabile operation, strict financial management, long-term R & D forces, upgrading of products and continuous growth, so it is necessary to take the advantage of the forces of the M&A funds to promote equity and industrial structure adjustment and upgrading.
According to incomplete statistics, there are currently nearly 5000 companies (institutions) engaged in equity investment business at present in China in the forms of fund companies, fund management companies, investment companies, investment management companies, innovation investment companies, venture capital, high-tech investment companies, investment consulting companies, investment service center, investment legal counsels, with investments involving all aspects of the national economy, and amounting to $100 billion, which play a positive role in promoting China's economic development.
In the future, the industry shall work to further sum up the experience, with emphasis to be improved in the following areas: firstly, unified standards for market regulation. Legislation shall be specified on the current basis, and Methods for Equity Investment Fund Management shall be unveiled and its detailed rules shall be developed as soon as possible, and specific details shall be prepared under the framework of the Partnership Enterprise Law; secondly, relaxing the capital access channels for LP, allowing and guiding foreign investments and all kinds of social capital, and private capital to enter the equity investment market. For China's institutional investors, due to current restrictions on their respective regulatory policies, banking, securities, insurance, and large-sized central enterprises face lots of barriers for their capital to enter equity investment. At present, with the increasingly growing social security funds, insurance funds and brokerage firms have entered the pilot phase, and relevant policies will be gradually introduced, and shall be enhanced and improved soon; thirdly, focus shall be placed on nurturing a group of professionals. This requires the positive participation of fund managers with good professional quality and past performance to promote the common growth of the industrial professionals; fourthly, widely nurturing projects suitable for PE investment. Now, project information is too scattered with high cost of search, so project trading market shall be prepared and established to cater for PE investment preference, to build a diversified, complete, and closed project information system to reduce the search and survey cost of equity investment projects.
China's PE development needs the joint efforts of government and the market as well, and China's PE regulatory model and development approaches not only need to borrow international experience, but also seek its own development roads based on the specific situations of China. On the basis of the past successful experience, and in combination with the current hot topics discussed in the major forms of keynote speeches, parallel forums, and on-site dialogue, the forum will cover in-depth discussion on such issues as the supervision and self-discipline under the new financial structure; dominant industries for PE investments in China; development and mutual relationships in China between RMB funds and funds in foreign currencies; global strategy of Chinese capital; the exit environment of China's capital market; and the role of PE in economic restructuring.
The Forum will invite leaders of China’s central bank, CBRC, CIRC, and CSRC, as well as National Development and Reform Commission, Social Security Fund, Beijing Municipal Government, and other departments to attend the forum and deliver important speeches. China Equity Investment Fund Association (preparatory), Beijing Private Equity Association (BPEA), Emerging Markets Private Equity Association (EMPEA), British Venture Capital Association (BVCA), European Private Equity and Venture Capital Association (EVCA), China Venture Capital Association (CVCA) and the heads of other international well-known PE organizations will once again gather in Beijing, and share their experience and academic viewpoints with domestic and foreign PE leaders such as Fang Fenglei, Yi Xiqun, Wu Shangzhi, Tian Shuning, Zhao Linghuan, Xiong Yan, Dean of Finance Department at Peking University’s School of Economics He Xiaofeng, EMPEA President Roger. Leeds, Carlyle Group founder of David M. Rubenstein, CalPERS Joncarlo Mark, Jeremy Coller (founder of Coller Capital), Patricia Dineen, Managing Director of Siguler Guff, Actis partner, Wang Jiansheng, Moeen Qureshi, EMP Global Chairman, Pakistan's former Prime Minister, Craig Bond, CEO of Standard Bank China (CIBC JV), and Steve Wu, Managing Partner of Aureos Capital. The forum is expected to witness 700 participants.
For more details, visit the Forum website at www.forum.bpea.net.cn
Attachment: Background information
I. Beijing Global PE Forum profile
Beijing Global PE Forum is a global equity investment fund industry gathering initiated by Beijing Financial Office, Beijing Private Equity Association, China Equity Investment Fund Association (preparatory) and Emerging Markets Private Equity Association (EMPEA), aiming at erecting a positive and efficient dialogue platform for the gathering and communication of the sectors and relevant people at home and abroad.
In November 2008, Beijing Global PE Forum was successfully held. Ji Lin, Executive Vice Mayor of Beijing, Wang Zhongmin, vice chairman of the National Social Security Fund, Yuan Li, assistant to the chairman of China Insurance Regulatory Commission, Shao Bingren, head of the preparatory group of CEIFA, as well as presidents and vice presidents of associations attended the forum and gave speeches. Such international well-known association as NVCA, EVCA, and EMPEA also dispatched high-level leaders to attend. With more than 600 participants, the forum is the largest and most influential industrial event in the domestic PE industry. It is highly recognized by the global industry, and has formed huge influence and appeal.
II. Beijing Private Equity Association work profile
Beijing Private Equity Association was established on June 20, 2008. Over the past year since its establishment, it has done such major work as follows with the guidance and support of relevant government departments:
1. Promoting the unveiling of Beijing's PE preferential policies
The Association listened to its members’ comments and suggestions, and actively promoted the unveiling of the Opinions on Promoting the Development of Equity Investment Fund Industry by the Beijing Municipal Government. On Jan. 19, 2009, Beijing Municipal Government issued the Opinions on Promoting the Development of Equity Investment Fund, specifying the offering of such measures as facilitating business registration to equity investment funds or management companies, and incentives to equity investment enterprises so as to propel the development of the equity investment industry, which has been highly recognized in the industry.
On Mar. 13, 2009, the State Council made the Approval on Supporting Zhongguancun Science Park to Build National Demonstration Zone for Independent Innovation, specifying that the state early pilot policies for equity investment funds are applicable to the industrial investment funds or equity investment funds registered in Zhongguancun Science Park, which creates a good environment for the further development of equity investment in Beijing.
In 2008, there were 184 equity investment and venture capital cases in Beijing, accounting for 24.2% of the country’s total, and the investment amounted to $3.442 billion, accounting for 24.9% of the country’s total, with the both factors ranking the 1st in China. In 1H09, the enterprises in Beijing won 44 deals of investments, accounting for 23.91% of the country’s total, and the investment amounted to $5.138 billion, accounting for 83.31% of country’s total, also ranking the 1st at home. Facts have proved that Beijing has become the central city for the country's equity investment.
From June 2008 to September 2009, 27 equity fund institutions finished registration in Beijing through the Association with accumulative registered capital totaling 4.658 billion yuan, and the capital under management reaching 40.2 billion yuan; 38 equity investment institutions are under registration, with intended registered capital reaching 4.08 billion yuan, and the capital under management totaling 137 billion yuan. Hopu Investment Management Co, CDH Investment Corporation, China Broadband Capital Partners, Hony Capital, SAIF Investment Fund, and other well-known equity investment institutions gained rapid and sound development in Beijing.
In addition to those under registration, the Association has now 61 members with total assets under management reaching more than 300 billion yuan so far with the support of Beijing Financial Office.
2. Organization of events and erection of platform for industrial exchange
The Association takes positive actions to erect the platform for the communication and exchange between its members, and has organized and held lots of forums and meetings:
(1) In November 2008, the Association successfully organized the first Beijing Global PE Forum.
(2) On June 3, 2009, the Association successfully held the Equity Investment Fund Development Forum. (The Forum focused on the introduction to the development of environment of Beijing municipal equity investment fund industry, built a dialogue platform for the gathering, communication, and exchange between equity investment funds registered and to be registered in Beijing and relevant government agencies, and promoted the development of Beijing equity investment fund).
(3) The Association also organized a number of fund registration seminars, with a total of more than 600 visits to the seminars.
3. Founder of PE professional journal to deliver PE Information
On Jan.1, 2009, the Association began its publication of China's PE and VC Special (Weekly), targeting mainly at 18 offices and bureaus under the ministries and commissions, association members, and PE-related institutions. The Weekly delivers market dynamics to the government, and policy information to its members and PE-related institutions, having become an important reader for government agencies to gain an understanding of the PE industry, and it has won unanimous recognition of the industry.
4. Cooperation to enhance the awareness and influence of the Association
The Association makes active communication with relevant agencies to carry out diversified cooperation. At present, it has established cooperation relationship with lots of relevant institutions and organizations such as China Association of Small and Medium Enterprises, Chinese Ministry of Commerce Investment Promotion Bureau, Beijing Investment Promotion Bureau, Beijing Municipal Commerce Commission, Beijing Bankers Association, Securities Association of Beijing, Insurance Association of Beijing, Beijing Futures Association, China Association for Peaceful Utilization of Military Technology, Beijing
5. Positive preparation and establishment of China Equity Investment Fund Association
Beijing Equity Investment Fund Association is also the preparatory group of CEIFA, having started initiation and preparatory work:
(1) It has conducted close communication with National Development and Reform Commission, People's Bank of China, the Ministry of Finance, the Ministry of Commerce, CSFC, CBRC, CRIC, the State Administration of Taxation, the State Administration for Industry & Commerce, and other relevant government departments, to promote the preparatory work on China Equity Fund Association, with Cheng Siwei, Xiang Huaicheng, Dai Xianglong, and Chen Yuandan serving as honorary chairmen of the Association.
In view of the functions and positioning of the national association, the preparatory group has initially built up a basic framework for the national association, and preliminarily specified the service contents of the national association, and drafted the plan for the self-regulation and regulation of the association.
(2) The preparation group assisted the National Development and Reform Commission to solicit industrial comments and suggestions, making positive efforts and contributions to the unveiling of the Interim Measures for Equity Investment Fund Management;
During NPC and CPPCC, the head of the preparatory group submitted Addressing the financial crisis, and accelerating equity investment fund development, strengthening the deputies’ understanding of the industry, and winning unanimous approval and support from the industry;
Wu Xiaoling, director of the Financial and Economic Committee of the National People’s Congress, and other leaders who show their concern and support for the PE industry discussed on the PE industry’s self-regulation and supervision, leading to the draft of the plan for the industry’s self-regulation and supervision. They also gave positive support for and took active part in the discussion on the revision of the fund law;
The group organized member institutions of the Association, accounting firms, law firms and other relevant people to discuss relevant tax policies on equity investment funds, and the Measures for Management of Recognizing Residents and Enterprises’ Income Tax Collection According to Actual Management Agencies (tentative) (draft for comments), and delivered opinions to relevant departments including the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce and the State Tax Administration;
In combination with the industrial opinions, the group also submitted to the CSRI reports and suggestions on partnership enterprises to open accounts on the securities market;
The group solicited opinions on the Advice on the Polices for Insurance Companies in Conducting Equity Investment from the members of the Association, its counterparts, and various local financial offices; it also assisted Beijing Financial Office to draft the measures for development and promotion in Beijing.
(3) In addition to extensive communication and cooperation with various local associations at home and those in Hong Kong, Macao and Taiwan, the preparatory group has also established working liaison its international counterparts such as NVCA, EVCA, and EMPEA, exchanging information, researching on issues, and jointly promoting the development of the industry.