2020.11.16 CoStone Capital Views:
On November 16, 2020, Insurance Asset Management Association of China(IAMAC) released the the evaluation of private equity investment fund managers for insurance fund investment, and CoStone made the Class A list.
On November 16, 2020, Insurance Asset Management Association of China(IAMAC) released the the evaluation of private equity investment fund managers for insurance fund investment, and CoStone made the Class A list.
On November 13, China Banking and Insurance Regulatory Commission(CBIR) issued Notice on Financial Equity Investment of Insurance Funds, lifting the restriction of insurance funds on financial equity investment. Now such investment is no longer limited to insurance companies, non-insurance financial institutions or insurance-related pension industry, medicare and automobile services. A total capital of nearly ¥20 trillion awaits opportunities.
It is highly relevant that IAMAC chose to announce its evaluation of private equity investment fund managers at this timing, and it will also be significant for the industry’s future. The evaluation is highly professional with scientific indicators: The 9 primary indicators include: Company governance and investment team, management system, risk control, scale and performance, post-investment management, lawful operation, insurance cooperation, incentive and restraint, and information disclosure. Supplemented by an additional 50 secondary indicators, a comprehensive evaluation of the company is provided.
The evaluation aims to improve services of private equity investment fund managers for insurance fund investment, and is from the prospective of insurance institutional investors. Guided by rules and regulations of the industry, IAMAC has conducted evaluation of 143 PE fund managers based on their annual performance. (The evaluation is for the reference of insurance institutions, and shall not be used to guide investment decision, nor shall it be used for horizontal competition among PE fund managers). Based on evaluation indicators and standards, evaluated managers are divided into four classes from A to D, and result shows that 76 companies were awarded Class A.
IAMAC has previously issued Evaluation Rules for Private Equity Investment Fund Managers of Insurance Fund Investment (Trial) in March, 2019. The 19th item mentioned that IAMAC would establish a market-oriented management mechanism for different classes based on evaluation result.
Many established General Partners in the industry has made the list, such as Sequoia Capital, CICC and CoStone.
In addition, China Venture Capital Commission and the China FOF Alliance launched the Trustworthy Whitelist for the first time in the Chinese equity investment industry.
As of November 16, the 7th Trustworthy Whitelist of Chinese equity investment fund managers was issued. In total, 40 government-guided fund managers, 35 market-based FOF managers, 20 early-stage investment fund managers, 38 venture capital fund managers, and 30 PE fund managers. CoStone Capital is also on this list.
PE investment features long-term investing and resilience against economic cycles, which is compatible with insurance capitals. Currently only ¥2.2 trillion of the ¥20 trillion total is invested in corporate bonds, and PE investment is even less, which marks a huge potential for PE fund managers, and leading companies with abundant resource and steady performance will be favored. The new policy has provided new opportunities, which would promote further collaboration between LP and GP.
Rewritten by: Xue Guanda, Edited by: Du Zhixin, Li Yunzhen
The year 2019 marks the fortieth anniversary of China’s Reform &Opening-Up, once again, we meet at the turning point of history. What’s the next step for the game, is there any clear guidance? The answer is affirmative.
Our country is enjoying a good momentum of development, which does not come from the Washington Consensus nor the Beijing Consensus. China’s experience has proved that both the visible hand and the invisible hand are crucial: the visible hand, stands for the government-led reform, and would yield benefits for reform and opening up; the invisible hand, stands for the Marginal Power represented by the private sector, and would improve economic efficiency and tax collection, create jobs and employment opportunities.
Provided that we want to protect and expand the benefits form reform, three simple but mandatory agreements are to be made and followed: No.1 Private ownership must be recognized, protected and treated equally with public ownership constitutionally, both ownerships are scared and inviolable;No.2 Make further clarification of the principal position of market economy, “deepen economic system reform by centering on the decisive role of the market in allocating resources”, as President Xi addressed in the third Plenary Session of the 18th CPC Central Committee;No.3 Implement the guiding principles of “comprehensively promoting law-based governance” of the fourth plenum. The rule of law is essential for economic growth, irreplaceable to protect private ownership, and necessary to encourage innovation and entrepreneurship.
Above are three rules for us to avoid falling into the Middle-income Trap. Assuming that we are breaking systematic barriers to private enterprises’ participation in market economy, and boosting innovation and entrepreneurship of our society, then we are heading towards a promoting direction. We are marching in the path of light, regardless of the ups and downs of Sino-US relationship, the drop in GDP growth rate, or the monetary policy.
These principals also apply on knowing how better to run a business: don’t be hedged by rules and regulations at the beginning, pay more attention to your survival, and you’ll learn more when you start your second business.
For many years, Huawei has been the only Chinese company on the list of the Top 50 R&D Spenders. Regardless of the economy and its income, what Huawei has been doing is investing in its future, dedicated to R&D, continuously and resolutely. This provisional work underscores Huawei’s accomplishments, making Huawei anindustry leader.
So, there are standard answers on how to run a company,which could be summarized as concentration and professional dedication, continuous investment on innovation and trying harder in R&D. Entrepreneurship is also important, every single company needs entrepreneurs to push aside all obstacles and difficulties, to implement strategies and ideas. We, as investors, are destined to look for such outstanding entrepreneurs and their companies, invest in them and partner with them.
At this key point of history, a country, a company, or asingle individual, will all need to find the right path. Four decades after the Reform and Opening-up, it’s time to learn from our experience and stop “wadding across
