Securities Times reporter Liu Jingyuan

　　Since the pilot began in 2015, it has been seven years since the birth of insurance private funds.

In the past seven years, how has the PE of the insurance capital system developed?

　　According to incomplete statistics from Securities Times reporters, as of the end of January 2022, there were 18 insurance private equity fund managers, 4 insurance groups each had 2 managers, and more than 100 insurance PE funds had been registered.

These funds are experiencing the "seven-year itch" - the proportion of funds that have been liquidated exceeds 22%, of which a few are normal liquidation, and the majority of deferred liquidation and early liquidation.

　　The increase in PE in the insurance sector represents an active attempt by insurance capital in the field of equity investment.

From what the Securities Times reporter learned from the interview, insurance-based PE has certain differences in investment direction and style compared with market-based PE.

Although equity investment is a relatively unfamiliar field for insurance capital, insurance capital generally has high hopes for equity investment, believing that it is an important business to deal with the decline in long-term fixed income investment returns.

However, primary market participants still believe that relevant institutions should lower their expectations for equity investment performance.

　　The expansion of private equity managers in the insurance department

　　According to the incomplete statistics on the filing information of the Insurance Asset Management Association and the Fund Industry Association by a Securities Times reporter, as of now, there have been at least 18 private equity fund managers established by insurance institutions, and some insurance groups have 2 private equity managers.

　　Specifically, two private equity managers under the same group include China Life Equity Investment Company and China Life Goldstone Asset Management Company; Ping An Chuangying Capital Management Company and Ping An Basic Industry Investment Fund Management Company; Beijing Taikang Investment Management Company and Taikang Health Industry Fund Management Company of Taikang Department; Taiping Poly Investment Management Company and Taiping Innovation Investment Management Company of Taiping Department.

　　At the same time, PICC, CPIC, China Re, Huatai Assets, Dajia Assets, CCB Insurance Asset Management, Huaxia Jiuying Asset Management, Huaan Property and Insurance Asset Management and many other insurance institutions have also established or invested in private equity fund managers.

Among them, the newly established CPIC Private Equity Fund Management Co., Ltd. was established in March 2021. The funds that have been launched so far include CPIC Great Health Industry Private Equity Investment Fund (Shanghai) Partnership (Limited Partnership), CPIC Xinyi No.1 Private Equity Investment Fund (Shanghai) Partnership (Limited Partnership).

　　In 2015, the private equity fund of the insurance department started a pilot program.

In that year, Sunshine Ronghui Capital, in which Sunshine Assets held 35% of the shares, and Heyuan Capital, which was funded by Everbright Sun Life Assets and a number of insurance companies, were established successively, becoming the first two private equity fund managers with insurance backgrounds.

　　Subsequently, in September 2015, the regulatory agency officially promulgated relevant policies.

The former China Insurance Regulatory Commission issued the "Notice on Matters Concerning the Establishment of Private Insurance Funds" (No. 89 [2015] of the Insurance Regulatory Commission), which allows insurance asset management institutions to set up private equity fund managers, who will issue and manage insurance private equity funds.

After the policy was released, China Life Equity Investment Company, which was established in June 2016, became the first insurance-based private equity fund manager. The company has initiated the establishment of two major health funds and one major pension fund.

　　More than 100 funds have been established

　　The establishment of a private equity fund manager represents the first attempt by insurance capital to carry out equity investment and become a GP by itself; while the establishment of a PE fund for insurance capital means that insurance capital has begun to make specific arrangements for private equity business.

　　According to statistics from the Securities Times reporter on the filing information of the Fund Industry Association, the above-mentioned 18 insurance private equity fund managers have established more than 100 funds, reaching 105.

　　Among them, Heyuan Capital has established the largest number of funds, with more than 30 funds on record; CCB Equity Investment has also established more than ten funds; Sunshine Ronghui Capital has established 8 funds, which is also considered a lot.

The Securities Times reporter learned from people close to Heyuan Capital that some of the funds established by Heyuan Capital are single-project funds, so the number of funds is large.

　　According to the analysis of private equity funds, insurance-based private equity funds mainly invest in mid-to-late enterprises or mature projects. Compared with angel investment and venture capital funds, there are far fewer bidders.

Therefore, in theory, there will not be too many funds initiated and established by an insurance fund manager.

Judging from the existing situation, the number of funds established by each insurance private fund manager is between 1 and 3.

　　Several funds have been liquidated early

　　According to the statistics of the Securities Times reporter, among the above 105 insurance private equity funds, 24 have been liquidated, accounting for 22.8%.

Among them, 4 funds were liquidated normally, and most of them were liquidated in advance (14 funds) or deferred liquidation (6 funds).

　　Among the liquidated funds, 19 were established between November 2014 and November 2016, accounting for nearly 80%.

In other words, most of these liquidated funds have been established for more than 5 years.

The other five liquidated funds were established after April 2017, and they were all "liquidated in advance".

　　A market-oriented private equity fund person said that there are usually three ways to exit equity investment, namely project mergers and acquisitions, corporate IPOs or direct liquidation of corporate bankruptcy.

Comparing these three paths, most of the invested projects will be in a state of being difficult to exit, and the proportion of completing the exit requirements on schedule will not be too high.

　　For example, a fund raises 100 million yuan and invests in 10 projects one after another. When the fund investment expires, if only one company has achieved an IPO, and other companies have not yet reached the IPO stage, the equity cannot be sold. In this case It's hard to quit.

Usually when exiting a fund, there will be "tails" in the fund's portfolio that cannot be exited.

　　However, he believes that the insurance capital is relatively stable, and there may be corresponding arrangements, such as agreeing on the repurchase clause of the actual controller of the invested company when investing.

To put it simply, before the time of the fund exit, the invested company will be required to realize an IPO. If the IPO is not realized, the actual controller of the company needs to repurchase the equity, thereby completing the fund exit.

This may also be an exit method that is more valued by insurance funds.

　　Of course, liquidation only means the withdrawal of investment from the fund, and only from the information of liquidation, it is impossible to judge the performance of the investment.

　　Appropriately lower earnings expectations

　　Establishing private equity fund managers and launching private equity funds is a way for insurance capital to increase equity investment as a whole.

In recent years, driven by factors such as falling interest rates and economic transformation and upgrading, insurance capital has paid increasing attention to equity investment.

In terms of positioning, insurance private equity managers, as professional equity investment platforms, shoulder multiple functions such as cultivating and enhancing the overall equity investment capabilities of the insurance industry and serving strategic development.

　　According to the survey information of the Insurance Asset Management Association, insurance private equity funds are mainly invested in the fields of health care and elderly care, strategic emerging industries and other fields.

At the same time, insurance private equity deeply understands the demand for insurance funds, and can provide production-based services according to insurance fund management requirements and investment preferences, avoiding homogeneous competition with market-oriented private equity funds that generally pursue high risks and high returns, and achieve stable cash flow. , strong certainty, large-scale capital and other infrastructure, clean energy, medical care and health and other fields to form a differentiated competitive advantage and leading development trend.

　　In terms of operation, an insurance private equity fund person told the Securities Times reporter that due to the cross-fund and insurance industry, it will be strictly regulated by the "one bank, two meetings" and related industry associations, making insurance private equity funds become the norm for operation in the market. This is also a distinctive feature of insurance private placement.

　　At present, insurance-funded PE is facing competition with social market-oriented PE and industrial capital in the primary market.

For those in it, the market is getting harder to do.

　　"The core logic of equity investment is that a company can maintain a relatively high growth rate, and as the economic growth shifts, the company's performance growth rate should be reduced. At the same time, for investors, performance expectations should also be appropriately reduced. " said a market-oriented private equity fund source.

The problem facing equity investment in the current primary market is that most of the leading companies in the main track have been listed, and there are fewer and fewer companies that can be invested in. The performance expectations of non-leading companies are based on the average market growth rate.

At the same time, there are fewer and fewer opportunities for companies in emerging industries.

In addition, IPO income generally decreases, and the valuation and income of equity investment should be lowered.

In terms of industry selection, it is necessary to follow the direction of national policies.

　　Some people from private equity funds in the insurance department believe that, looking at the equity investment market, the insurance department has a lot of room for expansion, especially in the context of the relaxation of restrictions on the insurance equity investment industry, the "dual carbon" strategy, "stuck neck" technology and other fields need Long-term funds, large financial support.

A question worth pondering is, how should insurance private equity funds lead the development of the industry in integrating into the national strategy?