Nowadays, investment institutions not only invest enterprises, but also deeply influence enterprise development in strategic decision, team building, etc.
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Do investment organizations feel difficultly in raising funds in 2020? Which kinds of sectors obtain financing more easily? How do institutions manage their investment projects? How are exits strategies of institutions going in "cold winter"?
In April 2018, new regulations about asset management were promulgated, and the liquidity of market capital was restricted greatly. As the “capital winter” comes, PE/VC institution enters the integrated development period to return value investment. Even worse, the global outbreak of COVID-19 epidemic at the beginning of 2020 severely influenced the recovery of investment institutions. However, COVID-19 also brings opportunity to some industries, such as healthcare, online education and enterprise service. Some companies in these sectors revitalize this year and become popular in capital market. more and more PE/VC institutions have shifted their focus to post-investment services, assisting the recovery of the companies they invested in.
In such a background, EqualOcean publishes this report about the China‘s Top PE/VC Investment Institutions in 2020 and selects the list of “China’s Top PE/VC Investment Institutions in 2020” to answer the entrepreneurs’ questions, such as “how to find projects with potential” and “how to find investors”. We also present the current situation of China's private equity market in 2020 for investors, analyze the’ post-investment management strategy of the top PE/VC institutions, and provide development guidance for more PE/VC companies.
In 2010-2017, China's private equity fundraising scale kept rising. In 2017, it reached a peak, and the scale reached CNY 1.7889 trillion. In 2018, new regulations about asset management were promulgated, cutting off the inflow channel of bank capital, the largest funding source on the private equity market. The market was badly impacted and the capital winter came. The COVID-19 epidemic spreads globally in 2020 and undoubtedly makes China's private equity fundraising market more difficult. Although recovering since the third quarter, the fundraising market cannot reverse the declining tendency all year round. As of the third quarter of 2020, 2,382 funds have been raised on market, and the total amount reached CNY 704.1 billion. It is predicted that the total amount will reach CNY 938.8 billion at the end of 2020, down 24.6% year-on-year. The average amount reaches CNY 296 million.
In the first half of 2020, influenced by the COVID-19 epidemic, China's private equity investment market cools down. However, with the effective control of COVID-19, the investment market begins rebounding after the third quarter. As of the third quarter, the investment amount of China's private equity investment market has reached CNY 602.2 billion. It is predicted that the investment amount in the whole year will reach CNY 802.9 billion, up 5.2% compared with that in 2019. Nevertheless, only 5,467 investment cases were found during the whole year, hitting a historical low since 2015. Consumer, healthcare, and technology industries rank the top three in investment amount scale, with the investment amount reach CNY 158.479 billion, CNY 129.114 billion, and CNY 98.864 billion. The sub-industry of consumer, education sector, especially online education finds new opportunities under the COVID-19.
Since the capital winter and COVID-19 shock China's private equity investment market, the competition among institutions is increasingly fierce. High-quality projects will evaluate the institutions' ability to provide guidance and industry resources for their development when selecting PE/VC, instead of only focusing on the scare of the capital the institutions can provide. The post-investment service has become a key indicator when evaluating the competitiveness of investment institutions. More investment institutions start focusing on post-investment services and helping the invested enterprises resist risk with internal and external resources.
Based on the public information and the interview of employees in private equity investment institutions, EqualOcean sorts out and summarizes the post-investment service of current China's private equity investment institutions, and divides the post-investment service into post-investment external service and internal service.
Post-investment external service covers Investment and financing assistance, Public relation image building, Enterprise business expanding and Government relations connection and policy guidance. Post-investment internal service covers Enterprise strategy consulting, Enterprise operation, Human resource.
In 2020, there are 3,501 exit cases in China's private equity market, which increases by 58.7% on year-on-year, in which there are 2,879 cases about IPO of invested enterprises, increasing by 79.3% year-on-year. The opening of SSE star market has driven the growth of quantity and scale of A-share IPO in the second half year of 2019 and 2020, and has expanded the exit channel of investment which is conducive to completing the closed loop of "raising, investment, management and exit" by institution.
For more information, please read the report:
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