New measures released for high-quality equity investment

Shanghai has released a batch of measures to direct more equity investment into startup tech companies via stimulus as well as better entry and exit support, according to local authorities.

They are expected to optimize the business environment of the city's equity industry and create high-quality growth of the sector in the long run.

Zhou Xiaoquan, director of the Shanghai Financial Regulatory Bureau, said the measures were pragmatic and innovative in refining the whole process of "entry, investment, management and exit" to cover all aspects of equity services.

The "Several Measures on Further Promoting the High-Quality Development of Shanghai's Equity Investment Industry" propose 32 measures in nine areas, with the focus on optimizing the equity investment process, supporting corporate venture capital, and directing more equity investment toward tech companies in their early development stage.

The measures also aim to create an atmosphere in which the government initiates investment for the institutions to follow, driving more capital to become long-term and sustainable investment, attracting more equity institutions to locate in Shanghai and develop in the long run.

The measures will come into effect on February 1.

As highlights, the measures address the issues of fundraising and investment exit. For the first time, there are policies encouraging fund management companies going public, issuing corporate debts and innovating business, promising support and incentives to related institutions.

Concrete programs are set to optimize the investment-facilitating system. For instance, stimulus will be offered to encourage the setup of funds that focus on investing in early-stage science and technology companies; meanwhile, professional service platforms for angel investment will be launched.

In addition, the measures encourage the formulation of equity investment clusters to improve the efficiency of services and create a better business environment.

"As an investment institution, what we are seeking is long-term capital," said Huang Yan, managing partner of Lantern Capital, adding that the measures' emphasis on enhancing the exit efficiency of mergers and acquisitions as well as reorganization is a strategy that matches the criteria of international equity investment market.

Ranked among the top global financial centers, Shanghai is making great efforts in supporting the equity investment industry. By September last year, there were 1,843 private equity and venture capital managers registered in Shanghai to manage 8,865 funds of a scale of 2.3 trillion yuan (US$320.8 billion) – all three figures ranking among the top in China.