What positive impact does the Opinions on IPO Reform have on equity investment funds? As a practitioner, briefly talk about my understanding:
1. The Opinions clarify that the issuance supervision department of the China Securities Regulatory Commission and the stock issuance review committee shall review the legality and compliance of the issuance application documents and information disclosure contents according to law, and shall not judge the profitability and investment value of the issuer.
Impact: Relatively speaking, the legal compliance of equity investment fund participating enterprises will be better, so it is expected that the approval rate of issuance will be greatly improved.
2. The Opinions clarify that the China Securities Regulatory Commission shall, within three months from the date of accepting the application documents for securities issuance, make a decision on approval, suspension of examination, termination of examination and disapproval in accordance with legal conditions and procedures.
Impact: It is clear that the time from accepting the issuance application to giving the audit decision is three months, which is greatly shortened compared with the previous 6-9 months or even 1 year, greatly improving the exit cycle of equity investment funds;
3. The Opinions clarify that when the issuer issues new shares for the first time, it encourages the original shareholders who have held shares for three years to transfer some old shares to investors, so as to increase the proportion of tradable shares of newly listed companies.
Impact: After three years of investment, equity investment funds can withdraw from the listing without waiting for the lock-up period. Equity investment funds can put the original lock-up period on enterprise growth, and the investment stage can be moved forward, so as to obtain more dividends brought by enterprise growth to make up for the reduction of institutional dividends under the original examination and approval system.
4. It is clear in the Opinions that the China Securities Regulatory Commission will approve the issuance of new shares after the issuer has passed the examination meeting and fulfilled the post-meeting procedures, and the issuance time of new shares will be chosen by the issuer.
Impact: It will be easier for enterprises to go public and issue shares, and they can grasp the rhythm independently.
Generally speaking, the reform of IPO system will greatly open the IPO exit channel of equity investment funds, shorten the fund exit cycle, and encourage funds to participate more in the investment of growth or even start-up projects, be the discoverer and creator of value, and then share the value, and truly play the great role of funds in supporting innovation and entrepreneurship, thus promoting the development of the real economy!
As for the biggest negative impact, the issue price will be lower than the approval system, especially the inquiry mechanism stipulated in the Opinions determines that people will not be willing to quote high prices. The investment value of PRE-IPO projects that were originally snapped up by equity investment funds will be greatly reduced. It poses a great challenge to the ability of equity investment institutions to discover and create value!