Advantages and disadvantages of PE in banking department

This newspaper reporter Joshui 2009, the Bank is the year of the rise of PE. As early as this year, ICBC International on the show, took the lead in cooperation with the Jiangxi provincial government to set up the Poyang Lake Industrial Investment Fund, management company for the joint venture, by ICBC International and Jiangxi Province, the local investment companies accounted for 50%, the first time to raise the scale of 102 billion yuan; and market gp--　　The advantageous capital cooperation set up a IPO fund, raises the capital 500 million yuan, simultaneously also is operating a convertible bond fund, through the dividend and the stock repurchase withdraws to guarantee the convertible bond type Special private fund. April, in the National Development and Reform Commission, the second instalment of the list of funds, Bank of China to the surface of the international. September, less than half a year, its 2.6 billion yuan in all the funds raised in place, and its other cultural industry fund in the application for the third batch of records.　　Compared with some other funds that have been filed or approved, this time it has been felt that the special efficiency of PE in the banking system. In fact, for the renminbi industry fund, BOC International was the first to intervene. At the end of 2006, the first domestic industrial fund Bohai Industrial Fund Management company is the Bank of China international accounted for large shares.　　In the future, it will also step up its layout.　　With the construction Bank of China, ICBC, the Chinese banking system in the increasingly active PE, the future, including Agricultural bank, postal savings banks, etc., may also be replicated. What are the advantages and disadvantages of PE in the banking department?　　What about sustainability?　　As a whole, the advantages of the bank PE are mainly embodied in: raising funds, looking for projects, investment tools, social resources integration and so on. Tan Lianfeng, senior manager of CITIC Industry fund, a brokerage background, believes that the advantages of PE in the banking system are embodied in two aspects. First, the strong background of commercial banks, raise funds strong, because it has ready-made network channels and high-end customer resources. Second, more investment techniques and tools, not only have equity and debt, in the future if the combination of mergers and acquisitions, then more powerful, can be called the Big Mac, in doing large mergers and acquisitions have advantages. For example, can continue to tap the acquisition of customer projects, through mergers and acquisitions, to carry out related industry integration.　　Like the former China policy, Jordan Group, in the field of mergers and acquisitions in the banner of the tree. Foreign PE Orchid Asia Investment director Li Yu agreed to the above point of view, and he also has deep experience in the specific operation, he stressed that the bank has two obvious advantages of PE: The first major advantage is the project resources and social resources rich. As a financial advisor, he cooperates with various branches of CCB to understand the specific situation of local enterprises and to judge more objectively. "If the incentive in place, the general VC, PE difficult to compete with." "Another big advantage is the project survey advantage.　　Project resources are mainly from the CCB customer, and CCB's loan officer, all the year round with these companies, no one more than they understand the actual operation of the company. And just with ICBC cooperation practitioners------Wukezhong, chairman of the dominant capital, said, the reason for the choice of cooperation with the Bank, is mainly to value its project channel resources, so far, after all, most of the project has not beenMining。　　To this end "need a big spender", but he also admits, is only the beginning stage. Green Source Capital President Huang that the future PE needs to be transformed. Before the major investment in some traditional manufacturing enterprises, the future, more opportunities in the service sector, including real estate, health care and education.　　Next, China's PE development will be more like the United States, in the future there will be more investment space, not fewer and less. But overall, for some policy, cyclical, public welfare industry, foreign PE has no advantage. For example, a large state-owned enterprises, with a lot of loose hospital assets, the future to implement stripping, industrial integration, and then listed, foreign investment is difficult to intervene, more opportunities will be left to state-owned PE, especially some comprehensive investment groups. Because the operation will be very complex, need to involve a variety of financial instruments, need to coordinate a variety of social relations.　　This is a great opportunity for the bank to be PE. In the future, he believes that foreign PE should be innovative, if involved in large mergers and acquisitions, and Chinese-funded PE cooperation.　　Even Ding Hui, Hong Yi, its social resources system is not strong enough. The disadvantage of the inferior bank is also as obvious as its advantage. For example, are incentives in place? Can development continue?　　Its potential risks for years to wait. For the Bank of PE, the industry a well-known organization partner Mr. Zhang is most concerned about whether it can continue. He talked about a recent negative message, a fund company backed by China merchants, which had a more serious problem of mobility. "In a sense, China merchants is more open than the International Bank of China." He talked about the two drawbacks of PE in the banking system. The first is the incentive mechanism. Exactly what mechanism to adopt. "I know the two young people who built the silver system, its background is very simple, in the past has not encountered such a good platform, the construction of silver can undoubtedly increase their qualifications and experience, while accumulating projects, personal resources, if the incentive is not in place, then a few years after the performance of Job-hopping, will have a greater impact on the company's business.　　Because the industry's dependence on people is very strong. The second is continuity. In the past, the direct casting was also very good, but only one or two cases are good, the next is not sustainable. In the system of PE, if the project manager pay as much as the president, can make sense?　　This platform is a good opportunity for young people with a high level of qualifications and ability to get to the surface quickly, but the banking system is a seniority system, long time, may feel unbalanced, to change jobs, and ultimately lead to a lack of investment sustainability.　　In any case, the Bank of PE, as long as the shareholders are firm, will certainly occupy an important position in the market, but in the end how overbearing, whether the continuation is indeed a question mark. Tan Lianfeng that the most unfavourable side is: The Bank of PE pay results and incentive mechanism is not in place, there is a parent company constraints, and the traditional banking system, if too much higher, certainly not easy to achieve, but the market-oriented PE are relatively high remuneration.　　Any mechanism-affiliated PE will have such weakness. As for some new models of exit, such as asset securitization, he thinks it is not a unique advantage of the banking system, others can play, such as Citic Securities itself has a strong asset securitization advantage, the key to see how to use. In addition, the so-called exit, everyone seems to stare at the IPO, in fact, not everyone can not see the other exit mode, but simply can not achieve. For example, to sell the industry leader this trick, but China's current industrial status is not reached that level, such as the publishing industry, there is no Big Mac enterprises, can sell to whom? Can you get a good price?　　The United States is different, at least Bertelsmann, has become the industry leader, there are holders of the people. And the bank is the competitor of PE, he thinks the main is those that market buys type PE, for example Hong Yi, Ding Hui, Citic, Magnolia officinalis and so on.　　and general investment early VC such as Sequoia, its, deep venture investment, etc., will become its partners. The bank is PE such organization subsidiary type Big Fund is competitive in the short term, but only is the short-term strength, if cannot solve these some fundamental mechanism question, is difficult to say has the long-term competitiveness.　　That is, very attractive in the short term, but after three or four years, and so on team has the experience, will be headhunting to dig, become a veritable training base, and the departure of a large number of teams, will be a heavy blow to the performance. Wukezhong that the key is that the concept of the bank and the concept of investment is not the same. Banks think it is a good project, but investors are not interested, and investors think it is a good project, the bank's interest is not big. The banks mainly look at the past and static assets, while the investors mainly look at the future, dynamic assets, the evaluation system is different. In this case, the bank is the advantage of PE, may also become its drag. For example, the same is 10 million yuan profit of two enterprises, how to choose? An enterprise net worth is 20 million, the other is 100 million, usually the bank will choose the net assets is 100 million of the enterprise, the subtext is even if the enterprise losses, bankruptcy, there is also 100 million yuan net worth can repay debt, and investors will choose the net assets of 20 million enterprises, because the subtext is, if you increase the profit of 10 million , you just need to invest 20 million more. "The investment concept of the two is very different, which will also bring great problems, the need for the banking system to make adjustments, and do a good job of convergence, can no longer use the eyes of banks to do investment."　　"Commercial banks in the process of marketization, will be all kinds of business tied together to form the interests of the entire syndicate, so that loans can enjoy investment benefits, and investment can share the loan proceeds."　　But this is still a non-market performance, at least not enough marketization, just imagine if the full market, the banking system PE will have no advantage, those who have invested in traditional PE enterprises can also get the bank loans. Wukezhong said that the future of PE competition is not in the capital size, but the project channel competition.　　Before, more is encounters the accidental project, has the very big luck ingredient, but in the future, looks for the target enterprise, certainly will have the systematic method, covers the goal, the standard method, chooses the project resources. In the future, each PE will look for and establish its own project channel, especially the brokerage direct investment,The banking department and so on, will have their own advantages channels, which is the basis of Wu and his cooperation. The invisible risk of state-owned PE is about the disadvantage of PE in the bank, if the above people are all from the short term, then, the Development Research Center of the Department of Finance researcher Wu Qing from a long-term perspective, the future, including the Bank of PE in the large state-owned enterprises have a large hidden risk. He believes that the bank is the impulse of PE, indicating that the country into the people back into the field of PE. Not one who supports state-owned enterprises, whether state-owned enterprises or private enterprises, the rules are still the same, but the result is that private enterprises were squeezed out of the bureau.　　Does this mean that in the PE field, private enterprises will also be squeezed out of the bureau? Some people say that the state-owned enterprises dare to risk, and private enterprises dare not, private enterprise resistance to risk, state-owned enterprises strong resistance to risk.　　In fact, this is consistent with the real estate market, when bidding, private enterprises are often afraid to take a stand, and the state-owned enterprises Dare, the reason lies behind the bank to do the backstage, that the final loss is not their own, anyway, there are state-owned enterprises behind the financial institutions. In fact, VC, PE and real estate is the same, but also a part of the financial industry, but it is the most easily hidden areas of risk. The risk is that both loans and investments do not have a good firewall and are more likely to cover up risks. Usually, the last bad luck is the big shareholder, but that may be many years later will happen, the current executive layer is naturally not so worry.　　Therefore, in the next few years, non-performing assets will erupt, it is difficult to fall down.　　Three banks of PE comparative analysis found that the Bank of International, ICBC International and BOC International Three banks of the Department of PE positioning is different.　　With ICBC International and BOC International main business in Hong Kong, the bank has a team in Hong Kong and the mainland, the overall feeling is an active team. ICBC International and the Bank of China International, and the banking system is more separate, not much cooperation.　　The Construction Bank International and the parent company Construction Bank's cooperation nearly covers each project, both the CCB person and the Silver International person, has the good synergistic effect, including the provincial bank, the city row and so on.　　From a strategic point of view, ICBC International is to do from the bottom up, and build Silver International is from the top down, whether the direction, the intensity is relatively large. and build Silver International is the first from the market, from the beginning as a platform, step by step into, investment projects first to see which is suitable for exit, from the back forward.　　Because of the advantages of its investment banking background, in the underwriting project, know which is the most suitable for listing exit, so they from the exit channel to find projects, although the return is not too high, but can quickly create past performance, and strong liquidity. ICBC International has also said that the construction of the silver system is more active. "We are also at the trial stage. Now the banks are operating, but the characteristics of different, the construction bank's plan is relatively large, and ICBC is slowly realized. The key is policy support, especially in the implementation of some details, to be done a little bit. "Huang that the construction bank in the past is a project-oriented, its business model and PE closer, in the silver is mainly import and export trade, while the silver is mainly consumers, so, build silver this aspectThe most obvious advantage.　　But in any case, the future of the major lines will do so, that is backed by the bank tree, relying on large investment banks to do PE. The key is who's going to be overlord?　　Li Yu that the future of the Bank of PE are stone tigers, not paper Tigers: a big, hard, powerful, but the vitality is limited, will not stir the market, more likely to be in the system and market cracks in the dance.　　And with the rise of the Bank of PE, the future of China's PE layout will be changed, and eventually form a large, medium and small PE coexistence balance pattern.　　The so-called large PE, mainly refers to the bank of PE, the future of the insurance system PE, as well as the formation of the climate of the brokerage direct investment system, as well as Citic, Magnolia officinalis, Ding Hui, Hong Yi class management tens of billions of of the market-oriented PE. The key to find their own position, to see the most suitable for the big and medium which level? It's hard to be big and small, because the division of labor has begun.