The S market in China is experiencing a "slow maturation".
Against the backdrop of the continuous accumulation of primary market stock assets and the pressure on traditional exit channels, S transactions are evolving from a peripheral tool to a crucial part of the venture capital system.
At the 19th China Investment Annual Meeting - Limited Partners Summit, Touzhong Jiachuan hosted a closed - door meeting titled "Jiachuan Gathering: Exploring the Source - Insights into the Value and Innovative Paths of S Transactions". Through the sharing of front - line investors from equity exchanges, state - owned guiding funds, market - oriented S managers, insurance funds, and industrial capital, a real picture of the Chinese S market was systematically outlined:
On the one hand, the transaction scale and the number of participating entities are growing rapidly, and complex forms such as share transfers, continuation funds, and asset reorganizations are emerging continuously;
On the other hand, real - world constraints such as pricing mechanisms, decision - making efficiency, compliance responsibilities, and transaction capabilities still give this market the typical characteristics of "rapid growth but slow maturity".
Fifteen investors also shared the differences in positions and common challenges of different roles in S transactions at the salon:
State - owned assets move forward cautiously within the framework of systems and responsibilities; insurance funds repeatedly weigh between certainty and returns; market - oriented institutions attempt to build long - term capabilities through industry research, structural design, and cycle judgment.
Many guests jointly pointed out that S transactions are no longer a "bargain - hunting market" but an investment method that is highly professional, emphasizes asset allocation, and highlights active management and long - term collaboration.
From global experience to Chinese practice, from share transfers to structured transactions, the practices and inquiries of the participating investors demonstrate that the S market is entering the "deep - water zone" and reveal the real possibility of it becoming an important connector between long - term funds and stock assets.
01. The S market is developing rapidly but remains an emerging market
Currently, what stage has the domestic S market development reached?
Liu Jiawei, the founding partner of Boyuan Capital, first shared his views on the domestic S market.
He believes that the domestic S fund market is still a relatively new market. Although both China and the United States have a stock of equity of about 16 trillion, compared with the United States, China still has a long way to go in terms of S transaction volume and activity.
Temporally, S funds only started to show product - like characteristics in 2023. From 2023 to the present, more and more participants have entered the S market. In addition to professional S investors, financial institutions, securities firms, and state - owned entities have all participated in S transactions. The overall buyers and sellers in the transactions have become more diversified.
In his view, the rapid development of domestic S funds is driven by three factors:
First, the gap between the stock and exits is extremely large. In China, exits mainly rely on the capital market. However, even at the peak, the annual IPO issuance volume is only about 500 billion RMB, which is far from enough to solve the problem of large - scale stock accumulation. Second, the construction of infrastructure, including equity exchanges, is accelerating. Third, with the overall environmental changes, people's preferences for risk and return have also changed. S funds can achieve a relatively neutral balance among liquidity, safety, and profitability, which can better meet the requirements of some investors seeking stable returns.
Liu Jiawei also candidly said that the S strategy involves highly non - standard asset transactions with strong trading attributes, which is actually a problem that is easier said than done. He analyzed that there are currently three major difficulties. First, S transactions require a very strong ability to acquire resources. Second, there needs to be a relatively efficient decision - making process system. Third, a powerful transaction ability is required. One must not only be able to identify the value of assets but also face diverse trading opponents, formulate various trading plans, and at the same time, test the team's valuation and pricing capabilities.
02. State - owned S transactions: a gradual and long - term challenging process
State - owned institutions are becoming important participants in S transactions.
Futeng Capital shared the practices in Shanghai. Xu Binghui, the general manager of the S fund investment department, systematically explained the reasons why state - owned share transfers are "highly difficult" from the perspective of front - line operations. He pointed out that since the preparation of the S fund, Futeng Capital has actively promoted various state - owned share transfers. Since the end of 2021, it has almost visited all the municipal and district - level state - owned assets, guiding funds in Shanghai, and also visited many state - owned assets in regions such as the Yangtze River Delta and the Pearl River Delta. It has contacted nearly a hundred state - owned LPs, but relatively few state - owned share transfers have been successfully completed.
The core obstacles are concentrated in three points: the failure of the pricing mechanism, the inability to discount in the evaluation, and the difficulty in unifying multi - party decision - making. In the first state - owned share transfer, the transaction took more than a year from the first communication in 2023 to the completion of the delivery in early 2025, involving problems such as price communication and evaluation by appraisal institutions, with extremely high transaction costs. This has directly led many market - oriented buyers to "shy away" from state - owned shares - investing half a year or even longer may end up with nothing, resulting in a relatively low cost - effectiveness ratio.
He further pointed out that there is a significant "multi - party decision - making" phenomenon in state - owned share transfers. The intention of grass - roots and middle - level employees to promote the transaction does not mean that it can be finally implemented. Any veto at an evaluation node will make all previous efforts in the transaction go to waste. He said bluntly that promoting a state - owned share transfer is even more difficult than introducing a state - owned LP.
Nevertheless, he believes that the trend is gradually improving. With the introduction of relevant management measures for central and state - owned enterprises, the improvement of evaluation methods, and the emergence of some price adjustment mechanisms, the operability of state - owned share transfers is gradually increasing. Futeng Capital has recently promoted listed state - owned share transfer cases (single - transaction scale of 3 - 400 million yuan) at the Shanghai and Beijing Equity Exchanges respectively. He judged that the flow of state - owned shares is an inevitable trend, but since each state - owned enterprise has different difficulties, it is destined to be a long - term and gradual challenging process.
Zhang Kun, the managing partner of Futeng Capital added that S funds should be clearly positioned as an investment tool that is counter - cyclical and emphasizes asset allocation. Its core lies in selecting undervalued industrial sectors across cycles rather than chasing the hottest current tracks. In 2023, against the backdrop of extremely low market sentiment and valuations, Futeng Capital took over many medical fund shares, and the returns have proven to be better than expected. Then, from the end of 2023 to 2024, it shifted its layout focus to integrated circuits, reflecting the characteristic that S transactions are more suitable for allocation during the trough period of the industry.
In the specific implementation of S transactions, he emphasized that one cannot simply rely on the "discount" logic but must evaluate the underlying assets according to direct - investment standards. When dealing with large - scale fund shares containing hundreds of projects, the team uses the method of "screening core assets by weight" and involves the direct - investment team in in - depth judgment to avoid systematic misjudgments.
Huang Siting, the assistant general manager of Jianfa Emerging Investment, pointed out that Jianfa Emerging Investment has been transforming from an "LP with direct - investment capabilities" to an "operation service provider for the venture capital industry chain" in recent years. Under this new positioning, fund shares and stock assets are no longer the result of passive holding but need to be systematically operated through various means such as buying, selling, joint investment, priority/inferiority, and front - end and back - end structures. As of now, Jianfa Emerging Investment manages funds with a scale of about 30 billion yuan and has long - term services for insurance funds, financial institutions, and social security funds. Its S transactions and share flows have become a normal - state capability.
She emphasized that the key to Jianfa Emerging Investment's continuous high liquidity is the early establishment of an "active repayment mechanism". The company set DPI repayment requirements in its second year of establishment and has maintained a stable annual repayment of about several billion yuan in recent years through continuation funds, share transfers, and old - share transfers, even during difficult times in the secondary - market exits. The core experience is that S transactions are not last - minute actions but require systematic preparation at least three years in advance, including asset provision, fair - value adjustment, internal transfers, and structural reorganizations, to reserve space for future transactions.
In terms of actual operations, Huang Siting believes that the premise of large - scale S transactions is that "both the seller and the buyer are ready". This not only tests the quality of assets but also the decision - making efficiency, organizational consensus, and negotiation ability of the manager. She pointed out that high - quality assets often need to be "held in segments and transacted in combinations" to release liquidity through the cooperation of multiple buyers, asset splitting, and reorganization, and a long - term and stable buyer network is crucial.
She also emphasized that S transactions are not one - time games but long - term relationship management. For GPs, the completion of a transaction is only the starting point. The subsequent continuous, timely, and transparent information - disclosure ability directly determines whether the S fund can be responsible to the upstream LPs. Finally, she believes that for state - owned assets to truly manage liquidity well, the prerequisite is that the management team has a long - term mindset, treats the institution as a "start - up company", and is willing to make collective decisions, share risks and benefits, and work together with a long - term partnership mindset. This is the fundamental dividing line for state - owned assets to actively participate in the S market.
Ye Bo, the deputy general manager of Hangzhou Industrial Investment Group, systematically explained the overall attitude of state - owned assets towards S funds from the perspective of a local state - owned industrial investment platform: they have realized the necessity but have not yet entered the practical stage.
Hangzhou Industrial Investment Group was established in 2019, and the scale of the Hangzhou Innovation Fund it manages has exceeded 150 billion yuan. Currently, most of the funds have not entered the concentrated exit period, and in actual operations, extensions as agreed and natural exits are still the main methods. Therefore, S funds have not yet become an urgent tool. Although the state - owned platform has studied S transactions many times, the practical difficulties in top - level design, valuation and pricing, and responsibility mechanisms are significantly higher than those of market - oriented institutions. Currently, the Zhejiang Equity Exchange is promoting the inclusion of S funds in the state - owned asset trading system, but it is still in the stage of encouragement rather than compulsion.
He pointed out that the institutional environment is undergoing positive changes. The requirement of "must be evaluated" for state - owned asset investment has loosened, and valuation methods are gradually being accepted, providing a more market - oriented and flexible pricing basis for state - owned assets to participate in S transactions. However, in practice, state - owned assets still face key confusions: when to choose share transfers, how to make decisions between transfers and extensions, and whether they will hesitate repeatedly for fear of undervaluing the value. In addition, state - owned assets have insufficient understanding of "where the buyers are" in the S market. In the past, most of the institutions they contacted were those seeking funds, not professional buyers of shares. Therefore, he called for a clearer market connection mechanism to help sellers match the appropriate buyer needs in advance before actually starting the transfer.
Zhang Shengli, the deputy general manager of Puxin Investment, shared his understanding and knowledge of S transactions from the dual identities of "state - owned assets + market - oriented buyer/LP". He believes that when state - owned assets engage in S transactions, they need to distinguish the nature of funds and their supervision: state - owned enterprise funds mainly aiming at preservation and appreciation, and guiding funds mainly aiming at industrial development, have different tradability in the primary and secondary markets. Logically, if there is no strong market - oriented investment willingness at the primary stage, it will naturally be more difficult to attract market - oriented buyers at the secondary share stage.
State - owned S transactions face not only market factors but also many factors such as decision - making, pricing, procedures, accountability, and compliance. It is necessary to gradually promote the construction of relatively clear mechanisms and systems to provide a policy basis for state - owned S exits. If state - owned assets, especially those in the form of guiding funds, want to promote S transactions, they should actively promote the improvement of higher - level systems on the basis of the current regulatory framework. In addition, in terms of specific measures, the establishment of an S mother - fund for continuation operations can be considered.
From the buyer's perspective, the logic is relatively simple. Generally, the preferences are: clear underlying assets, strong liquidity of major assets, and appropriate prices. Transactions with private sellers may have higher efficiency, while state - owned share transactions often have relatively slow and few completions due to comprehensive factors. The truly tradable assets are mostly concentrated or mainly include listed or highly certain projects. Of course, the pricing is also market - oriented and is closely related to factors such as asset quality, supply - demand relationship, and the current market situation.
03. Insurance funds are still in the exploration stage of S investment
It is not only state - owned assets that pay high attention to S transactions. Insurance funds are also important participants in the market.
Lai Yalong, the person - in - charge of the Guoshou Jinshi S fund, pointed out that as a provider of long - term funds with a huge capital volume, insurance funds are not "naturally suitable" for the S market. The core challenge lies in how to match the nature of insurance funds, regulatory requirements with highly non - standard, rhythm - dispersed, and asset - complex S transactions.
In the past two years, China Life has made useful attempts in exploring and deepening large - scale S transaction opportunities in relay investment with government industrial guiding funds. At the same time, to further systematically grasp the opportunities in the S market, China Life is seeking to transform from "passive allocation" to "active empowerment", matching the strategic S fund path of market - oriented transactions, and continuously building a new capability matrix of "patient capital + professional operation".
She introduced that currently, Guoshou Jinshi (managing funds with a scale of over 60 billion yuan), a wholly - owned insurance private - fund manager under China Life, is promoting the launch of an actively managed Guoshou S strategy fund to cover a wider range of market transaction opportunities. This strategy is not limited to a single transaction type but is open to multiple models such as LP share transfers, complex continuation reorganizations, and asset - package transactions. It uses the fund - based method to disperse liquidity, returns, and risk constraints to better match the allocation needs of insurance funds.
In terms of the cooperation model, Lai Yalong emphasized that China Life does not take "playing games with GPs" as the core but chooses to establish a collaborative relationship with different types of professional S managers and GPs: participating in opportunistic allocations in share - type transactions and jointly designing continuation or reorganization plans with GPs at the core - asset level. She believes that more and more high - quality GPs are actively releasing high - quality assets due to real - world constraints such as fund expirations and LP structure adjustments, which provides an opportunity for insurance funds to participate in high - quality S transactions at a reasonable price.
04. How do market - oriented institutions conduct S transactions
Hu Hui, the founding partner of Dingxin Capital, shared that Dingxin completed an S - share transaction in June. She pointed out that S transactions should shift from the "bargain - hunting mindset" to "segmented risk/return matching": early - stage LPs bear blind - pool risks, while mid - and late - stage LPs obtain more transparent assets and are willing to wait longer. This is essentially a natural arrangement in long - term investments where "different investors bear risks at different stages".
She believes that the future large - scale S market will come from mid - stage transactions of funds that are "not in extreme distress but have high - quality assets", rather than bargain - hunting opportunities such as those from real - estate LPs or crisis - driven sales. She also emphasized that GPs should not regard buyers as "trading opponents" but should build long - term collaborative relationships. By asking "what the buyers really value", she aims to promote a more mature S mindset: transparency, growth potential, and the rationality of the transaction structure are more important than "how much of a discount".
She also pointed out that GPs will actively promote S transactions due to the need for LP liquidity management rather than being forced to sell. Therefore, S transactions should not be regarded as a negative label but as an important liquidity tool in the asset - management system.
Zhang Minxuan of Bohua Capital shared his understanding of the S market and investment methods. He emphasized that S transactions are never "bargain - hunting". The core is to find opportunities where "good assets + reasonable seller reasons" appear simultaneously. Both factors are indispensable. Therefore, the essence of S transactions is a "cyclical + probabilistic" trading window. Buyers are often "less professional than sellers" because professional GPs and LPs have natural advantages in terms of understanding of fund LPs/GPs, information on underlying assets, and industry knowledge. For S managers to succeed, they can only deepen and strengthen their "single - point capabilities", especially in in - depth investment research in specific industries.
He introduced that Bohua Capital's strategy is to focus