Pengarahan yang kuat, peningkatan kemampuan, mekanisme yang lebih baik. 16 langkah di Shanghai melonggarkan pembatasan dana milik negara

Reporter Zhang Shuxian, Securities Times

On April 7, the Shanghai Municipal State-owned Assets Supervision and Administration Commission (SASAC) officially issued the “Guiding Opinions on Further Promoting High-Quality Development of Private Equity Investment Funds of Regulated Enterprises under the Shanghai Municipal SASAC” (hereinafter referred to as the “Guiding Opinions”). It has, from three aspects—strengthening guidance, enhancing capabilities, and optimizing mechanisms—formed 16 work measures to promote that state-owned capital becomes long-term capital, patient capital, and strategic capital serving industrial development.

A Securities Times reporter noted that the “Guiding Opinions” focuses on the entire fund operation process, such as fund establishment, asset valuation, investment decision-making, and others. It has refined and supplemented the “Business Management Measures for Private Equity Investment Funds of Regulated Enterprises under the Shanghai Municipal SASAC” (hereinafter referred to as the “Fund Management Measures”) issued by the Shanghai Municipal SASAC in August 2024.

For example, the “Fund Management Measures” stipulate that when a regulated enterprise initiates the establishment of a fund or participates in investing in a fund, it should, after the plan is approved by the group, conduct prior filing or submit a report to the Shanghai Municipal SASAC. The “Guiding Opinions” clarify, for the special circumstance in which a regulated enterprise initiates the establishment of a fund but does not contribute capital, the requirements for filing after implementation, with overall management handled by each regulated enterprise.

The “Fund Management Measures” require regulated enterprises to fully leverage the fund capital amplification effect, and have set, for different types of funds, the upper limit of the principle-based subscription ratio. Combining with the results of investigations and research, the “Guiding Opinions” state that for regulated enterprises initiating and establishing a single-asset special fund within the scope of their main business, the subscription capital contribution ratio may be relaxed, and they also support regulated enterprises in appropriately simplifying internal establishment procedures.

In terms of the investment decision-making mechanism, the Shanghai Municipal SASAC introduced that the investigation found that there is a certain trend of “GP-ization” among state-owned LPs in the market. By seeking nominations to ensure their representatives are appointed as investment decision-making meeting commissioners, they protect their own interests, and the voting of an overwhelming majority adopts an “institutional vote” model, which to some extent affects investment decision efficiency. In response, the “Guiding Opinions” proposes that regulated enterprises may take methods such as dispatching observers to the investment decision-making meeting or appointing members of an advisory committee to ensure rights to know and supervision rights; for those for whom it is indeed necessary to nominate investment decision-making meeting commissioners, the nominees should have the ability to perform their duties and help improve the level of investment decision-making, and they are supported to independently express investment decision-making opinions within the authorized scope (that is, “individual votes”). At the same time, it further encourages state-owned capital funds, as needed, to introduce a certain proportion of industry experts as investment decision-making meeting commissioners to enhance professional competence.

Given that outstanding fund managers have strong professional capabilities, enabling them to precisely uncover the potential value of early-stage hard-technology projects, and to form pricing that is more closely aligned with market rules and industry credibility. The “Guiding Opinions” further clarifies that after undergoing relevant decision-making procedures, regulated enterprises may differentiate the conditions such as the proportion of state-owned capital contributions, hurdle rates, and the base for management fee accrual set for outstanding fund managers, with a focus on funds that invest primarily in seed stage and early-stage technology-based enterprises, which may further relax the conditions.

For lead-investment pricing capability, considering that early-stage projects have a high degree of uncertainty and often lack financial indicators that can be referenced, higher requirements are placed on the management team’s valuation and pricing capability. The “Guiding Opinions” emphasize that state-owned capital funds should adopt scientific valuation methods suited to different growth stages of technology enterprises, focusing on key indicators such as the core team’s capability, the intensity of R&D investment, technical originality and breakthrough degree, patent quality, the strategic position in the industrial chain, growth expectations, and others, to effectively enhance lead-investment pricing capability in early-stage sci-tech innovation fields.

Co-investment and profit-sharing of excess returns are incentive-and-constraint mechanisms commonly implemented by market-oriented funds. To further align with market-oriented funds, the “Guiding Opinions” encourage industrial investment funds and financial investment funds to implement co-investment mechanisms; support management teams to obtain co-investment returns and profit-sharing of excess returns by holding employee co-investment platforms (SLP) or GP shares.

Regarding the performance evaluation system, the “Guiding Opinions” emphasize that regulated enterprises should follow the rules of fund investment operations, implement an evaluation mechanism combining annual assessments with long-cycle evaluations, tolerate normal investment risks, and not simply use gains or losses from a single project or a single year as the basis for evaluation, so as to eliminate concerns about investing in early-stage projects. At the same time, it requires regulated enterprises to differentiate the setting of financial indicators and non-financial indicators based on the type of fund and the operational stage it is in.

The “Guiding Opinions” also clarify that when regulated enterprises transfer fund shares or, in the case of corporate-form funds, transfer equity in the invested companies, they may, in accordance with valuation reports issued by third-party institutions based on factors such as project circumstances, comparable market cases, asset liquidity, and others, reasonably determine the magnitude of price adjustments, safeguard state-owned capital rights and interests, and improve exit efficiency. The Shanghai Municipal SASAC stated that when approving the plan for transferring shares of a state-owned fund, regulated enterprises may also simultaneously approve the subsequent allowance of staged price adjustment ranges and lower limits in circumstances where no intended transferee has been solicited, thereby improving transaction efficiency.

(Editor: Wen Jing)

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