Touzhong View: The State Council approves the expansion of the New Third Board, and PE is expected to increase investment and exit channels
On August 3, the China Securities Regulatory Commission announced that, with the approval of the State Council, it has decided to expand the pilot program for share transfers of unlisted joint-stock companies. Following the principles of "overall planning, phased implementation, and steady execution," a national share transfer system for small and medium-sized enterprises will be established, gradually incorporating mature industrial parks into the pilot scope to provide services such as share quotation and transfer for unlisted joint-stock companies in these pilot parks. The first batch of expanded pilot zones, in addition to Beijing Zhongguancun Science Park, includes Shanghai Zhangjiang High-Tech Industrial Development Zone, Wuhan East Lake High-Tech Development Zone, and Tianjin Binhai High-Tech Zone.
IPO has always been the primary channel for VC/PE institutions to exit. However, this year, against the backdrop of a sluggish macroeconomic situation and a downturn in global capital markets, the number of IPO companies has significantly declined, VC/PE institutions' exit channels have gradually narrowed, and book exit returns have shown a downward trend. According to statistics from CVSource, a data product under ChinaVenture, 104 companies were listed on the A-share market in the first half of this year, raising a total of 72.6 billion yuan. The number of listed companies and the amount of funds raised decreased by 38% and 58% respectively compared to the same period last year. Meanwhile, 93 VC/PE institutions participated in 63 corporate IPOs in the first half of the year, with an average book return rate of only 4.58 times.
The New Third Board is an important component of innovation in China's capital market, marking a significant step towards building a multi-tiered capital market in our country. It also serves as a reservoir for the SME Board and ChiNext, supplying many excellent companies to the A-share market. According to data compiled by ChinaVenture, since the establishment of the New Third Board, a total of 6 companies have transitioned from the New Third Board to the SME Board and ChiNext, among which Beilu Pharmaceutical and Century Real brought substantial exit returns to the participating VC/PE institutions (see Table 1).
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