Private equity firms' "IPO subscriptions" exceed 700 million yuan within the year, with private equity funds in the hundreds of billions becoming the main force

Source: Securities Daily Author: Fang Lingchen

Since the beginning of this year, private equity firms have shown a significant increase in participation in offline allotments of A-share new stocks. Data from Private Equity Ranking Network shows that as of March 8, private equity firms have participated in the offline allotment of 9 new stocks this year, with a total of 34.14 million shares allocated and a total amount of 753 million yuan.

Li Chunyu, FOF fund manager at Shenzhen Rongzhi Private Equity Securities Investment Fund Management Co., Ltd., stated that private equity institutions actively participate in offline new stock allotments mainly for three reasons: First, offline “IPO subscription” features relatively controllable risks and quicker profit realization, effectively smoothing the product net value during market fluctuations; second, the supply of new stocks in hard technology fields like AI is expected to increase by 2026, further enhancing their attractiveness; third, private equity firms can significantly improve overall allocation probability and scale through strategies like “multi-product tranche allocation.”

Private funds worth hundreds of billions of yuan have become the main force in “IPO subscriptions.” Data from Private Equity Ranking Network shows that among 162 private equity firms participating in this year’s offline new stock allotments, 77 firms allocated less than 1 million yuan, 65 firms allocated between 1 million and 10 million yuan (excluding), and 20 firms allocated 10 million yuan or more. Notably, 56 private equity firms with assets of hundreds of billions of yuan participated in the offline allotment of new stocks this year, with a total allocation of 656 million yuan, accounting for 87.12% of the total private equity “IPO subscription” allocations. All 20 private equity firms with allocations of 10 million yuan or more are billion-yuan private funds.

Liu Youhua, Research Director at Qianhai Private Equity Ranking Network, said: “Billion-yuan private funds have advantages in capital and scale, reputation, and compliance in IPO subscriptions. Currently, regulators encourage participation of medium- and long-term funds in the capital market, and offline allotment resources continue to tilt toward professional institutions. It is expected that the ‘Matthew Effect’ among leading private equity firms will further strengthen.”

Specifically, private equity firm Jiukun Investment is the most active in IPO subscriptions, participating in the offline allotment of 8 new stocks including Beixin Shengming, Gude Electric Materials, Hengyun Chang, Linping Development, Shimeng Shares, Yishiwei, Zhenshi Shares, and Zhixin Shares, with a total of 1.7906 million shares allocated and a total of 58.0508 million yuan. Billion-yuan private fund Century Frontier participated in the offline allotment of 8 new stocks including Beixin Shengming, Gude Electric Materials, Linping Development, Shimeng Shares, Yishiwei, Zhenshi Shares, Zhixin Shares, and Eke Lantian, with a total of 3.3135 million shares and 57.9379 million yuan allocated. Ningbo Huanfang Quantitative followed, participating in 8 new stocks including Beixin Shengming and Gude Electric Materials, with a total of 1.8486 million shares and 56.975 million yuan allocated.

In Liu Youhua’s view, active participation of billion-yuan private funds in IPO subscriptions can have multiple positive impacts on new stock pricing and the market ecosystem. First, it enhances market pricing rationality. Professional institutions, based on in-depth research and concentrated quoting, can effectively curb irrational speculation and bring pricing closer to the intrinsic value of companies. Second, it stabilizes the initial performance of new stocks. As long-term stable capital inflows, private equity firms help smooth out price fluctuations on the first day of listing and protect the interests of small and medium investors. Third, it guides rational market investment. The participation of leading private equity firms helps establish value investing as a model, reduces short-term speculation, and promotes a more mature, healthy, and sustainable market development.

(Edited by: Wen Jing)