The Influence And Development Of National Equities Exchange And Quotations(NEEQ) On PE Institutions

On March 2014,Jiuding Capital officially listed on National Equities Exchange and Quotations(NEEQ)in China,which is the first NEEQ listed Private Equity(PE)institution.By the end of December 2015,there are 26 PE institutions getting listed on NEEQ,including large-scale institutions like Jiuding Capital,CMS Group,Silicon Guigutiantang Limted,as well as that,small-scale instituions such as Fuhaiyintao Limited,Yongwan Capital,Maigaojinfu Limited are also included.Among all the listed companied on NEEQ,PE institutions account for 6 positions within the top 10 companies with largest market capitalization.The total amount of funding of PE institutions as a whole is ?29,427,000,000,accounting for a quarter of the total amount of funding by NEEQ.In 2015,PE institutions have become an indispensable force in both NEEQ and the entire capital market of China.On the one hand,under the demonstration effect,PE institutions are urgently seeking for the listing on NEEQ.On the other hand,the transformation of business pattern on PE institutions who have already gotten listed and their enormous financing effect is inconsistent with the positioning and purpose of NEEQ,which is servicing creative,start-up and growing firms.By the end of 2015,the regulator terminated both the listing of any PE institutions and the follow-up funding of any listed PE institutions.In just two years,the modification of listing policy for PE institutions has been quite significant.To sum up,clarifying the incentive of listing,effect of listing and market performance after listing regarding PE institutions is highly meaningful for the research on both valuation and funding issues of listed PE institutions,for the discussion of regulatory policy for PE institutions within NEEQ,for issuing appropriate regulatory policies and for perfecting the NEEQ market and even further,the entire financial market.This dissertation is mainly focusing on the research with respect to PE institutions listed on NEEQ.This research is essentially a multi-dimensional study,including the listing,public attention,trading mode,fundraising,asset management,equity fund investment,the withdrawal of certain project,the situation of project-in-process,the withdrawal of project-in-process and the valuation of project.The author considers that the incentives for PE institutions to go listed on NEEQ include the withdrawal pressure of capital owned by limited partnership within the fund management by PE,the pressure of funding,the issue of enhancing its own power and the difficulty of going public on Mainboard.All of the questions mentioned above can be relieved by NEEQ.In this part,this dissertation will discuss the capitalization of the share of limited partnership fund managed by PE institutions specifically during the process of listing regarding PE institutions.After the listing on NEEQ,large-scale PE institutions such as Jiuding Group,CMS Group raised large amount of capital and successfully transformed the business pattern.But listed PE institutions as a whole encountered a classical problem,that is,the withdrawal of invested project is generally very difficult.Meanwhile,the valuation method of project-in-process is to choose base date first and calculate the discount rate based on the comparable P/E ratio of listed companies and anticipated date of listing.However,this static valuation method is inaccurate because of the highly subjective choice of comparable company and expected date of listing,and the possibility of forged financial statements.Therefore,the author addresses that the disclosure of valuation information of the project-in-process should be enhanced,and the risk exposure ought to be disclosed in the documents of information disclosure.Finally,this dissertation points out that the transformation of business pattern on PE institutions who have already gotten listed and their enormous financing effect is inconsistent with the positioning and purpose of NEEQ,which is servicing creative,start-up and growing firms,resulting in the termination of listing of any PE institutions and the follow-up funding of any listed PE institutions.Accordingly,the author proposes that any regulatory policy issued on NEEQ should be based on the principle of both marketization and open market.