Introduction of delisting system indirectly benefits PE: forcing institutions to return to value investing

　　The delisting system for the Growth Enterprise Market is a good thing. It can promote PE to return to value, and for us, it means investing in better projects with real growth potential." Chen Wei, founding partner of Shenzhen Oriental Fuhai Investment Management Co., Ltd., commented this way when interviewed by a reporter from the Investor Daily regarding the upcoming delisting system for the Growth Enterprise Market.
　　In the eyes of Wu Kezhong, founder of Advantage Capital, the delisting system is something that PE institutions should have dealt with long ago. Wu Kezhong believes that "the delisting system should have been introduced at the same time as the Growth Enterprise Market. PE institutions are originally aimed at helping enterprises grow stronger, not just aiming for listing."
　　Beneficial for long-term development
　　Because in the absence of a delisting system, the industry has created many arbitrage opportunities, resulting in many PEs engaging in arbitrage.
　　Wu Kezhong told reporters, "Before the delisting system for the Growth Enterprise Market was introduced, PEs basically aimed for listing because they could engage in risk-free arbitrage. They would make surprise investments before listing, such as buying at 15 times the value and exiting at 30 or 40 times. They would choose arbitrage at every opportunity."
　　For example, before the listing of Jifeng Agricultural Machinery, Jiu Ding Investment invested at a cost of around 4 yuan/share. Due to the high valuation of the Growth Enterprise Market, after Jifeng Agricultural Machinery went public, Jiu Ding Investment could easily cash out at more than three times the price.
　　However, this disrupts the entire investment market. Because everyone is scrambling for pre-listing projects, the valuation of these projects is inflated, which also affects early PE investments, leading to higher PE investment prices. Due to fierce competition and strong arbitrage impulses, PEs hardly have the motivation to invest seriously.
　　Moreover, if the purpose is arbitrage, it will also lead to excessive packaging of enterprises by PE and investment banking institutions, but the actual performance of the listed companies is not as good as promised before listing.
　　According to the performance forecasts for the first quarter of this year, 89 out of 306 listed companies on the Growth Enterprise Market experienced a decline in performance, accounting for nearly 30.0%, and 15 companies are expected to report losses.
　　This situation is expected to change, because the introduction of the Growth Enterprise Market delisting system will allow everyone to return to value investing, and it will also be more beneficial to the long-term development of PEs. Chen Wei, founder of Oriental Fuhai, is optimistic about this.
　　Calling for supporting measures
　　Even so, in the view of some investors, the delisting system for the Growth Enterprise Market needs more supporting measures, otherwise, delisting of Growth Enterprise Market listed companies will still be difficult to achieve.
　　In fact, compared with the 11 triggering conditions for suspension of listing on the Growth Enterprise Market, such as three consecutive years of losses; negative net assets in the most recent year (previously two years); retrospective adjustments to previous annual financial accounting reports resulting in negative net assets at the end of the most recent year, etc., these triggering conditions seem very distant for the Growth Enterprise Market.
　　"At present, even if it starts to be implemented, there are still many imperfections. After the delisting system is introduced, if there are no supporting rules, it will still be difficult." Wu Kezhong said so.
　　Wu Kezhong gave an example, such as for companies that have already suffered losses, where should they be delisted to? And once these companies' performance improves, how should they be listed again?
　　In addition, according to the current regulations on company listing, the number of shareholders of a company should not exceed 200, but some delisted companies have hundreds or even thousands of shareholders. How should this phenomenon be resolved?
　　Regarding the future development of the delisting system, Wu Kezhong said that he will pay long-term attention and call for the introduction of other supporting systems as soon as possible. "If a company is delisted, how should tens of thousands of public small shareholders be managed? How can their investments be guaranteed? How should the company's information disclosure be handled? If not handled well, it may also cause some social problems, so supporting systems need to be introduced as soon as possible."