China Mulls Allowing Insurers to Invest More in VC Funds to Boost Innovation
(Yicai) June 27 — China will study raising the maximum share of insurers’ investments in venture capital funds to finance novel science and technology innovations.
The National Administration of Financial Regulation will keep improving the rules to guide insurers and asset managers to invest more in VC funds, Li Mingxiao, director-general of a department at the NAFR said during a briefing held by several regulators yesterday after the cabinet unveiled new policies in the VC industry.
The country will expand equity investment pilot projects, guide more insurance funds to invest in scientific and technological innovation, and bring more potential sources of long-term capital to VC funds, the General Office of the State Council stated in the document less than two weeks ago.
The NAFR will support trust companies, wealth managers, and asset managers to pile into VC funds, as well as develop long-term asset management products that are suitable for VC funds to meet diversified demand, following the principle of “sellers fulfill their duties and buyers bear the risks,” Li said.
Market participants have been concerned about VCs’ exit mechanism. The China Securities Regulatory Commission has been advancing the capital market reform and sparing no effort in providing a good foundation to ease exits, Wu Meng, department director, said to Yicai during the latest briefing.
For example, the CSRC is experimenting with allowing private equity funds to distribute stocks held in listed companies to investors via private transfers to enrich PE funds’ exit methods while mitigating impacts on the market.
Central government-owned enterprises have been attracting attention lately as state-owned capital is becoming increasingly active in the VC market.
The State-Owned Assets Supervision and Administration Commission of the State Council will further ease the limits on fund scale and investment ratio, as well as guide central government-owned firms in making good use of existing policies to focus on their primary businesses while using VC funds to invest more in technology leaders, commercialization of sci-tech achievements, as well as small and medium-sized enterprises across the industry chain based on their advantages, said Wang Hailin, director of a bureau under the SASAC.
Editor: Emmi Laine