Ding Feng·guan | Zhu Lei: The primary market investment needs to be cautious Opportunity in selected industries
Source: "China Fund News"
Author: China Fund News reporter Zhao Ting
According to data released by the fund industry association in recent months, in the continued increase in the number and size of private equity funds, equity private equity has become the main force, and private equity securities have shrunk. The industry believes that the main reason lies in the secondary market downturn, IPO speed, equity private equity fund raising is relatively easy.
However, as more funds are poured in, the primary market becomes more crowded. The reporter interviewed a number of equity investment managers learned that the current valuation gap between the primary and secondary markets is shrinking, there is no obvious opportunity for the valuation differential arbitrage.
Valuation differential arbitrage no obvious opportunity
In the eyes of the industry, the entry of funds into the primary market is not entirely due to the attraction of investment opportunities, but is subject to pressure to raise funds. “The secondary market has been gloomy and investors are less willing to invest. Although the primary market is not necessarily better than the secondary market in terms of cost performance, from the perspective of raising funds, at least one fund can be raised as a primary market. This is the pressure of reality," said Sun Xinghua, partner of Richeng Asset Management and director of the equity management department.
Zhu Lei, general manager of Ding Feng Assets Growth, stated that the main reason for capital entering the primary market is the acceleration of IPO audits, and relatively easy fund raising by equity funds. Just as the increase in the review after the new policy increase will result in difficulties in the CTF fund raising, This is not a decision on the quality of investment opportunities.
According to statistics, as of the end of April, the number of equity and VC private equity managers exceeded 10,000, an increase of 14.63% compared to the end of last year, and the management scale was close to 5.6 trillion yuan, an increase of 19.25% compared to the end of last year. At the same time, the number and size of securities private equity funds are declining.
With large amounts of money entering, it is not easy to make gold. In the first half of 2015, an investment manager of a venture capital firm in Shanghai once said that the bull market in the primary market is harder to do than the bear market because the valuation of the benchmark companies is relatively high and it is easy to open positions at high levels. However, in the face of the performance of the secondary market today, the investment manager felt that the valuation of the primary market had not yet receded and that the funds had led to tight supply and demand, and that the items that could be seen were more expensive.
Zhu Lei also said that the price in the primary market is indeed not cheap. Since 2015, the price in the primary market has not been significantly reduced, and the difference between the primary and secondary markets has been much smaller.
Need to change investment ideas
In the absence of a clear opportunity for valuation differential arbitrage, investors believe that investment in the primary market needs to be vigilant and change investment ideas.
Zhu Lei believes that standing on the current node, the valuation gap between the primary and secondary markets is shrinking. This is an objective situation. Some equity projects with valuations of 10 to 15 times may be 20 times more expensive for the benchmark companies to evaluate in the secondary market. , Counting about 25% of the IPO dilution of the IPO, there is really no valuation difference. At this time, it is necessary to change the investment ideas. In his view, the choice of investment opportunities lies in the selection of industries. On the one hand, to earn the growth of the company itself, the growth of the money brought about by the industry; the other hand, the IPO audit itself must also guide the adjustment and upgrading of the industrial structure, the future will certainly not be a certain amount of revenue, profit size, whether to IPO, The industry and industry stage in which the company is located may be even more weighted in measuring the elements of the IPO.
“The basic logic of our investment in the primary and secondary markets is the same. All of them are partial value growth. What is different is valuation considerations. That is, the same investment logic is used to assess the subject, and then the liquidity and maturity of the underlying market are determined. Adjust the valuation." Zhu Lei said.
Sun Xinghua said that in selecting the target, it will pay more attention to investing in some industries that have the advantage of industrial chain or cooperation with listed companies and change time for space. From the industry point of view, the primary and secondary markets are increasingly faster in conduction, and the primary market in the secondary market, such as manufacturing, consumerism, culture and entertainment, is also highly sought after. For the once hot Internet industry, equity investors are Become more cautious.
“Currently doing equity investment has been inappropriate, players in each field have been determined, want to participate only hard to fight prices.” Sun Xinghua said. In his view, the secondary market's valuation will be reduced to a reasonable level, but the funds will sink in the primary market, and the valuation of the primary market will be difficult to reduce in the short term.
Private equity funds placed in the secondary market are more cautious in primary market operations. Zhu Lei suggested that the risk of investing in the primary market at this stage is purely IPO arbitrage investment logic. In addition, we should also be alert to the IPO trap. Now as long as it is a project, it is said that it will go to an IPO. Many of these are impossible.