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Original title: Big Market of 100 Billion Levels! REIT public offering begins, and fund industry is “hello!”
Source: China Fund News
The public funds industry has introduced a new vintage product. A few days ago, the CSRC issued a notice to publicly solicit views on the “Guidelines for Publicly Increasing Investment Funds in Infrastructure Securities (Trial)”. Publicly elevated RE-IT products are gradually approaching.
The “Guidelines for the Public Offering of Investment Funds in Infrastructure Securities (Evidence)” (hereafter the “Guidelines” draft consultation) attracted wide attention in the industry. Some organizations predict that with reference to the size of the US market. USA And the ratio of GDP where REITs originated, the market size of China’s publicly-funded REITs can reach 6 trillion yuan.
Hiring REIT publicly released released
Notice noted that currently, there are no real public REITs in China. In order to effectively revitalize the assets of infrastructure shares, improve the quality and efficiency of the capital market to serve the real economy and enrich capital market investment and financing tools, within the framework of the Law of the Securities Investment Fund, the pilot of RE-IT financed with public funds in the field of infrastructure was prepared and the “Guidelines” were drafted. Consultation draft.
The draft of the consultation “Draft” has fully regulated the definition of the product, the qualifications and responsibilities of the participating entities, the registration of the product, the sale of fund shares, the investment operation, the management of projects, the disclosure of information and supervision and management. Some of these key factors have attracted market attention.
The Penghua Fund said that there have been two discussions on the structure of publicly funded REITs: one is the “public fund + capital” model, that is, the public capital fund invests in the capital of the project company, and the public fund serves directly as a shareholder in the project company that owns the underlying assets; the second is “Public Fund + Asset-Backed Securities” means that the underlying structure is packaged for asset securitization through the design of the transaction structure, and then the public fund will invest in asset-backed securities. The draft “Guidelines” solicited comment on the structure of “public funds + asset-backed securities”. At the same time, break the original concentration limit of “Double 10” and clarify that “over 80% of the fund’s assets hold all single-value shares of infrastructure asset-backed securities, and asset-backed securities infrastructure companies own all the capital of infrastructure project companies. “
The Penghua Fund further stated that the draft REIT pilot application clearly implements the capital investment guidance in asset selection, scheme design and price issuance, and clarifies the dominant position of public funds in adjusting the project, issuance, operation and approval of the letter. Although there are still differences in the scope of the underlying assets and the investment ratio of a single asset of publicly financed REITs abroad, the mode of operation is relatively close, and worth waiting for.
Chen Xingde, general manager of the Debon Fund, said that the launch of public infrastructure REITs at this time is of significant importance and role. One is to help ease the pressure of infrastructure investment; the second is of great importance in promoting supply-side capital market reform; the third is to effectively support the development of the real economy; the fourth is to provide new investment products for most investors.
Projects and talent reserves become the key to business development.
Public fundraising REITs are about to begin, and many fund companies are eager to try, hoping to get the first batch of manager ratings. However, some experts said that public funds do not have enough talent and project reserves, and that the initial stage of business development is not difficult.
“Fund companies are very willing to roll out REIT, and many companies want to fight for the first batch of manager ratings,” revealed one person from the fund company’s product department.
However, a person in the marketing department of a fund company said that placing publicly funded REITs by fund companies faces great challenges. “First, good projects are hard to find. Fund companies must compare REIT returns with other fixed-income products to attract investors; second, the draft” Guidance “for consultation commented that” the Fund companies need to establish independent infrastructure funds. “The investment management department will be equipped with no less than 3 responsible people with more than 5 years of relevant investment management experience. Fund companies can be said to currently have no relevant talent reserves, and the initial investment in the business is relatively large.
A legal person has a similar opinion. In his opinion, whether it be in personnel assignment, systems construction or project preparation, more resources are required. Fund companies that have an advantage in publicly funded REITs may not be traditional parent companies, but companies with a long history of shareholders in securities firms or subsidiaries with mature ABS experience.
“The strict REIT public placement requirements have discouraged many fund companies. The draft guidance draft requires fund companies to need to perform operational and management tasks for infrastructure projects, and very few companies have experience with this. area”. The aforementioned legal entity said that the prior public offering Investing in ABS need not be responsible for the underlying investment operations. The management of infrastructure asset-backed securities projects is not a traditional public offering business and may require the team of talents of shareholders or subsidiaries.
Many industry experts believe that the public launch of REIT will take time to formally launch. “At this time, we have just started soliciting input, and fund managers, financial advisors, intermediaries and other participants need to do a lot of pre-errand, project approval and other preparatory work,” said the legal person mentioned above.
In addition, education and tax arrangements appropriate for publicly funded REIT investors have also received much industry attention.
The aforementioned legal entity said that the draft “Exploration Guide” request requires that publicly funded REITs need to have more than 80% of assets to hold all the shares of a single asset-backed infrastructure. Compared to traditional public funds, the concentration of investment in non-standard single projects is higher. Therefore, in the process of selling funds, risk warning and proper investor management are particularly important.
Penghua Fund said the rapid and sustained development of REITs in the United States is primarily due to fiscal policy. The draft “Guidance” does not mention the issue of tax incentives and double taxation.
Ignite the “billion market”
In 2015, Penghua Qianhai Vanke REIT was established, the first REIT product to be publicly introduced in line with international practice, and no similar products appeared afterward. The launch of publicly funded REITS will ignite a “trillion market.” According to Penghua Fund estimates, at the end of 2019, the market size of publicly funded REITs in the United States was approximately US $ 1.3 trillion (approximately 7.9 trillion yuan), representing 6.5% of GDP. Based on this ratio, the market size of China’s publicly-funded RETIs can reach RMB 6 trillion.
“Although the Chinese market has not launched the REIT system before, but based on market demand, the institutions have effectively explored through the debt-like REIT model. The full scale of REITs issued by the Shenzhen Stock Exchanges and Shanghai is approximately 400 billion yuan, “introduced the Penghua Fund. China’s wide variety of infrastructure types and large-scale provide abundant core assets for publicly funded REITs, and the future market space for publicly funded RE-IT infrastructure is huge.
Chen Xingde said REIT is a milestone for the public funds industry, which means new products, a large market and huge challenges. The public fund will surely fulfill its mission, meet RIET’s issuance and management requirements for public funds, and strive for pilot success. I think China will also emerge as a powerful and professional infrastructure REIT fund manager like the American Tower (AMT). It can be said that publicly funded REITs are likely to rebuild a fund industry and a new subdivision capital market in the future.
The CICC Research Institute believes that the Chinese version of REIT will leverage high-quality assets to provide investors with profitable investment opportunities. From experience abroad, REIT products are not only suitable for investment in long-term funds (such as pensions, insurance, etc.), but also high-quality tools for individual investors to participate in the real estate market with low thresholds . At the time when the rate of return on conventional fixed income varieties is already low, investing in such fixed income assets is a good option.
(Editor in charge: DF372)
Editor in charge: Zhang Hengxing SF142
