Leveraging the Advantages of Private Equity and Venture Capital

 

 

Finance is the lifeblood of the real economy. In recent years, there has been a high emphasis on the high-quality development of private equity and venture capital, with repeated calls to actively develop venture capital, strengthen patient capital, and fully leverage the role of venture capital in investing early, small, and hard technology. Encouraging and regulating the development of angel investment, venture capital, and private equity investment, and better leveraging the role of government investment funds to develop patient capital, is not only a high recognition of the functional role of the private equity and venture capital industry but also sets new and higher requirements for the industry to serve technological innovation and the construction of a modern industrial system.

Private equity and venture capital funds, as an important way of direct financing, effectively attract various types of capital to participate, fully exert the guiding role of state-owned capital, and provide financial and various innovative elements support for enterprises. They play a fundamental and strategic role in promoting technological innovation, building a modern industrial system, serving the development of the real economy, and optimizing the structure of the capital market. To date, China's private equity and venture capital funds have invested in more than 200,000 enterprises, with an investment amount exceeding 11 trillion yuan, of which, investments in small and medium-sized enterprises and high-tech enterprises account for about 70% and 40% respectively, and investments in strategic emerging industries exceed 70%. These enterprises are numerous, developing rapidly, and are the most vibrant and vital innovation carriers, as well as the cornerstone of high-quality development of the A-share market.

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Jiangsu Province is rich in scientific and technological innovation resources and has a solid industrial foundation, with the number of listed companies ranking third in the country and the number of companies listed on the Science and Technology Innovation Board ranking first in the country. To accelerate the development of internationally competitive strategic emerging industry clusters and make Jiangsu an important position for the development of new quality productive forces, the Jiangsu Provincial Party Committee and the People's Government have established the Provincial Strategic Emerging Industry Fund, positioning it as long-term capital, patient capital, and strategic capital, and fully promoting the growth of Jiangsu's strategic emerging industries and the layout of future industries.

Jiangsu High-tech Investment Group is the only provincial state-owned enterprise in Jiangsu Province that takes private equity and venture capital as its main business, and it is also one of the earliest provincial state-owned investment institutions established in the country. Over the years, the group has always adhered to the positioning of "a professional tool for the government to implement industrial transformation and upgrading and a market-oriented competitive brand investment institution," and has insisted on deepening reforms to stimulate the internal driving force of high-quality development. It insists on the organic unity of policy guidance, market operation, professional implementation, and integrated operation, and has long insisted on investing in technology, growth, the future, and national needs, by establishing funds to invest in the self-reliance and strength of national science and technology. To date, the group has established nearly 130 equity investment funds, with a total capital management of over 140 billion yuan, and has invested in more than 1,300 innovative and entrepreneurial enterprises, promoting nearly 260 enterprises to go public or merge and reorganize in domestic and foreign capital markets. There are currently 13 enterprises in the process, continuing to cultivate listed reserve projects for the A-share market. More than 85% of the investment projects are directed towards key technology fields, covering new materials/ high-end materials, semiconductors/integrated circuits, life sciences/healthcare, new generation information technology, and high-end equipment/intelligent manufacturing, among other strategic emerging industries. 50% of the invested enterprises are small and medium-sized enterprises, 80% are high-tech enterprises, and there are more than 200 national-level specialized and specialized "little giant" enterprises, which have reserved a batch of high-quality listed reserve enterprise resources for the capital market, giving full play to the role of venture capital as "smart capital," discovering and cultivating high-quality projects, and promoting the development and growth of the capital market.

Since 2023, Jiangsu High-tech Investment Group has undertaken the specific work of establishing and managing the operation of the Jiangsu Provincial Strategic Emerging Industry Fund. The fund has a scale of 50 billion yuan and operates in the form of a company, investing around the "51010" strategic emerging industry cluster and "1650" industrial system of Jiangsu Province, as well as the strategic emerging industries and future industries fields clearly defined in related documents. The fund is positioned as "patient capital," emphasizing long-term companionship in enterprise growth, which is conducive to promoting a number of industrial projects that have a traction effect on optimizing the industrial layout of the province, and cultivating a number of specialized and specialized enterprises and single-champion enterprises that can effectively control the sub-domains and key links. The fund is established and operated in a way that links provinces and cities, governments and enterprises, and departments, coordinating provincial financial and state-owned enterprise funds, and striving to mobilize the enthusiasm of various cities and state-owned enterprises, actively attracting various types of capital and excellent investment institutions from inside and outside the province to participate in the investment and management of sub-funds, coordinating layout, forming a joint force, and playing a good game of strategic emerging industries and future industrial development in Jiangsu Province. Currently, the first batch of 14 industrial special funds and 50.6 billion yuan of the Jiangsu Provincial Strategic Emerging Industry Fund have been signed and landed, including 10 city industrial special mother funds and 46.6 billion yuan, and 4 future industry angel funds and 4 billion yuan. The relevant cities have all chosen leading and advantageous industries or key development industries as the direction of fund investment, such as Nanjing's software information and new power, Suzhou's biomedicine, and Wuxi's integrated circuits. The provincial emerging industry fund cluster will provide a large amount of long-term capital support for early and middle-stage, and growth-stage enterprises in the direction of strategic emerging industries and future industries, accompanying enterprise growth, cultivating the development and growth of industries, and bringing more investment options and higher long-term investment value to the A-share market. The first batch is expected to attract various types of capital to amplify and form a total scale of industrial special funds and industrial sub-funds exceeding 160 billion yuan.

Next, Jiangsu High-tech Investment Group will closely integrate the study and implementation of the spirit of the third plenary session of the 20th Central Committee of the Party with the group's deepening reform and promotion of high-quality development, adhere to innovation while maintaining the right direction, focus on problems, seize the opportunity, actively implement the major strategies of the Party and the state on the development of venture capital, and use patient capital to help the development of strategic emerging industries and the cultivation of future industries, and resolutely complete all key work tasks. Continue to play the professional role and functional advantages of private equity and venture capital, manage and operate the Jiangsu Provincial Strategic Emerging Industry Fund well, explore the market-oriented, professional, and rule-of-law operation model of government investment funds, better play the guiding function, cultivate more potential high-quality targets in the capital market, create more investment opportunities in the A-share market, better serve technological innovation and the construction of a modern industrial system, and contribute venture capital wisdom and high investment strength to promote the development of new quality productive forces and promote value investment in the capital market.