Equity investment trust business is expected to become a new growth point for trust companies. Recently, trust company equity investment activities have occurred frequently, with multiple trust companies including Daye Trust, China Construction Trust, CITIC Trust, and Huaxin Trust participating in or newly establishing equity investment partnerships, focusing on strategic emerging industries and other sectors. Industry experts indicate that equity investment business has distinct characteristics of "high risk, high volatility, high returns," and suggest that relevant participants should leverage their own advantages, fully utilize shareholder resources, and focus on investment tracks suitable for their development.
**Multiple Trust Companies Implement Equity Investments**
According to Qichacha information, on August 25, Beijing Zhongke Lantu Equity Investment Fund Center (Limited Partnership) was established, jointly funded by Daye Trust Co., Ltd. and Zhongzi (Beijing) Private Fund Management Co., Ltd., with Daye Trust contributing 30 million yuan as the main investor.
On August 12, China Construction Trust's portfolio company Guangdong Provincial Academy Of Building Research Group Co.,Ltd. (Guangdong Jianche, 301632.SZ), invested through Guangdong State-owned Enterprise Restructuring and Development Fund (Limited Partnership), was listed on the Shenzhen Stock Exchange ChiNext board. Guangdong Jianche's IPO issue price was 6.56 yuan per share, closing at 34.01 yuan per share on the first trading day, with an increase of 418.45%.
Additionally, on April 14 this year, Zhengli New Energy Battery Technology Co., Ltd. (Zhengli New Energy, 03677.HK), invested by CITIC Trust's wholly-owned subsidiary CITIC Juxin (Beijing) Capital Management Co., Ltd., officially listed on the Hong Kong Stock Exchange with an IPO issue price of 8.27 Hong Kong dollars per share and a market value exceeding 20 billion Hong Kong dollars.
Trust company investments in physical enterprises are not new. As early as 2016, during BYD's over 10 billion yuan A-share private placement fundraising process, Huaxin Trust provided significant support and achieved good returns. The issue price for this round of BYD's private placement was 57.40 yuan, raising 14.4 billion yuan. Among the investors were two trust plans from Huaxin Trust: "Jiuzhi No. 1 Collective Fund Trust Plan" and "Jiuzhi No. 2 Collective Fund Trust Plan," jointly providing approximately 7.5 billion yuan for BYD.
A research report from SDIC Taikang Trust believes that trust companies developing equity investment business can achieve value in four aspects: first, transitioning business models from indirect financing to direct financing; second, shifting management philosophy from short-term creditor thinking to long-term shareholder thinking; third, effectively supporting real economy development by providing comprehensive financial needs through investment-loan linkage; fourth, cultivating new business growth points under the regulatory "double reduction" background.
"Equity investment trust business is expected to become a key direction for trust business transformation," analyzed Yu Zhi, a researcher at Yongyi Financial Trust Research Institute. On one hand, regulation and policy guide the trust industry back to its origins, serving the real economy and supporting technological innovation through equity investment, aligning with national major strategies and regulatory orientation. On the other hand, equity investment trust is an important field of asset management trust under the new trust business classification, capable of matching long-term capital needs, obtaining long-term investment returns from assets, meeting trust company business transformation needs, and providing good investment opportunities and profit points for trust companies.
**Multiple Models Deployed, Investment Boundaries Gradually Clear**
Generally speaking, equity investment trust refers to trust business where trust companies invest trust plan funds in unlisted enterprise equity, restricted shares of listed companies, or other equity approved by regulators for investment. Equity investment trusts do not set expected returns and ultimately achieve investment exit through equity listing, agreement transfers, investee company buybacks, equity distributions, and other methods.
According to the "2023 Trust Industry Special Research Report," trust companies participate in equity investment through three main business models: First, direct investment model through trust plans, where trust companies raise funds from qualified investors by issuing and establishing equity investment trust plans, then directly invest trust funds in investee companies. Second, trust companies participating as limited partners (LP) in private equity investment funds. In this model, trust companies act as LPs, using trust plan-raised funds together with other LPs and general partners (GP) to jointly establish limited partnership funds, indirectly investing in one or multiple unlisted enterprises through limited partnerships. Third, trust companies establishing private equity (PE) subsidiaries to conduct equity investment business. Only a few trust companies established PE subsidiaries for equity investment business from 2011-2016, with no new approved trust PE subsidiaries since 2017.
It should be noted that equity investment trust balance began continuously declining after reaching a peak of 1.95 trillion yuan in 2017. By the end of 2021, the industry's long-term equity investment trust balance had dropped to 1.37 trillion yuan. In 2023 and 2024, equity investment trust balance declined again, falling to 0.15 trillion yuan and 0.13 trillion yuan respectively, with the proportion in capital trusts dropping from 9.11% in 2021 to 0.58% in 2024.
"The proportion of equity investment in capital trusts has become negligible!" Yin Xingmin, Director of Fudan University Trust Research Center, believes that affected by periodic adjustments in the equity investment market and increased A-share market volatility, the scale of trust companies' equity asset management products has declined. According to "Trust Industry Association research data," the scale of equity trust plans for 55 trust companies in 2024 was 696.762 billion yuan, down 16.73% year-on-year.
Industry experts believe that relevant restrictive policies have severely constrained the development and growth of equity investment trusts. Yu Zhi considers that the continuous decline in equity investment trusts is mainly due to regulation and business transformation. Before and after the implementation of new asset management regulations, the regulatory environment continued to tighten. The regulatory cleanup of "three-category shareholder" trust plan holdings, cleanup of disguised equity debt business, and real estate business contraction are all important reasons for the decline in equity investment business. Current equity investment business is no longer what it used to be, with equity investment business in forms such as partnerships and S funds potentially becoming mainstream and more compliant with regulatory orientation.
**Accelerating Layout of New Tracks**
The article notes that trust company equity investment trust business previously invested generally in real estate and infrastructure industries, while strategic emerging industries have gradually become the focus of business layout in recent years.
According to effective sample data from 47 trust companies collected in previous research by the China Trustee Association, 36 trust companies deployed equity investment trust business in real estate industry, 27 in financial industry, 25 in biomedicine/healthcare industry, 19 in infrastructure industry, 13 in semiconductor and electronic equipment industry, 11 in IT industry, 10 in machinery manufacturing industry, 9 in chemical raw materials and processing industry, and 4 in internet industry.
"Compared with other financial sub-industries, the trust system's unique advantages of risk isolation, cross-cycle asset allocation, and professional trustee management provide trust companies with a unique mechanism framework for cultivating patient capital," said a senior trust industry insider. Beyond trust's inherent advantages, this is also inseparable from relevant policy support.
In May this year, the "Several Policy Measures for Accelerating the Construction of Science and Technology Financial System to Strongly Support High-level Science and Technology Self-reliance and Self-improvement," jointly formulated by the Ministry of Science and Technology, People's Bank of China, Financial Regulatory General Administration and other departments, mentioned providing full-lifecycle, full-chain financial services for technological innovation, guiding long-term capital, patient capital, and quality capital into the field of technological innovation. It also mentioned "guiding wealth management companies, trust companies and others to participate in venture capital investment in accordance with laws and regulations."
It is reported that current trust equity investment business investment directions mainly concentrate in emerging industry fields such as pharmaceuticals, intelligent manufacturing, new energy, and new materials. However, emerging industries are often in early industry stages with urgent long-term equity financing needs. How should trust companies use traditional financing business models to provide financial support for companies in these fields?
Yin Xingmin, Director of Fudan University Trust Research Center, believes that for trust companies, first, they can use proprietary funds to invest in technology enterprises characterized by hard technology, greatly increasing the quantity of China's technology capital formation. Second, they can gather social funds including high-net-worth individuals to invest in technology enterprises in capital markets, not only bringing considerable medium-to-long-term incremental funds to capital markets but also creating a good atmosphere for society to support high-tech enterprise growth. Additionally, trust companies can provide merger and acquisition loans for technology enterprises through trust loans, making the technology finance system compatible with the needs of achieving high-level technology self-reliance and self-improvement goals, supporting modern industrial system construction.