The Shanghai municipal government on Wednesday released a set of 32 measures to promote the high-quality development of the city's equity investment industry, aiming to guide more early investment in small technology companies, cultivate long-term capital and further smooth the exit channels for equity investment.
Efforts will be made to launch a municipal-level science and technology guidance fund to orderly expand venture capital and angel investment of the kind, according to the new policies.
To nurture more long-term capital, the municipal government will guide more insurance capital team ups with leading equity investment institutions in Shanghai so that the former can increase their investment in key industries and hard technologies. Qualified asset management firms of commercial banks can set up subsidiaries in Shanghai to invest in unlisted enterprises and equity investment funds in Lingang Special Area or the Yangtze River Delta region in general, according to the newly released measures.
Zhou Xiaoquan, head of Shanghai municipal financial regulatory bureau, says the new measures are projected to direct more capital to early investment in smaller-sized technology companies. It will help to create an investment environment led by the government and followed by more institutions dedicated to long-term investment, he said.
While promoting the development of secondary market funds, pilot programs under which stocks can be distributed for equity investment should also be conducted to expand the exit channels.
Favorable tax policies have also been introduced. Venture capital enterprises and angel investors that have directly invested in seed-stage and start-up technology-based enterprises in the form of equity investment for two years can deduct 70 percent of the investment amount from the taxable income.
By referring to the registration-based initial public offering mechanism and the filing mechanism for Chinese companies' overseas listing, Shanghai-based equity investment fund managers are encouraged to list in overseas market in form of IPOs, mergers and acquisitions or restructuring, according to the new measures.
According to the statistics of the Asset Management Association of China, there were 1,843 private equity and venture capital managers registered in Shanghai as of the third quarter of 2023. They managed 8,865 fund products with the asset under management reaching 2.3 trillion yuan ($320 billion). Among them, the AUM of Shanghai's venture capital reached 615 billion yuan, ranking the first in China.