The scale of assets under management by privately offered funds in China has exceeded the 10 trillion yuan (USD$1.51 trillion) threshold for the first time in history.
The latest data from the Asset Management Association of China indicates the total volume of private offered funds increased by 260 billion yuan in August to reach 10.21 trillion yuan by the month’s end.
According to the association there are currently a total of 20,652 registered private offered fund firms in China managing 60,688 funds.
China’s private funds sector continues to heavily dominated by a small number of standout firms.
169 of the more than 20,000 private fund firms in China manage assets in excess of 10 billion yuan, for an increase of 36 compared to the end of 2016. These firms comprise just 0.8% of all private equity companies, yet account for nearly a fifth of assets in the sector.
A further 210 private fund firms manage assets of between 5 billion to 10 billion yuan, while 559 manage assets of between 2 and 5 billion yuan.
653 private fund firms manage assets of between 1 and 2 billion yuan, and 972 manage assets of between 500 billion and 1 billion yuan.
This leaves a further 3641 private fund firms managing 100 billion to 500 billion yuan in assets, and another 2034 in charge of 50 billion to 100 billion in assets.
Private equity/venture capital firms are a key driver of growth in the sector, managing a total of 6.37 trillion yuan in assets and accounting for 62.4% of the industry total.
According to Licai.com analyst Lei Lei, a major reason for the rapid growth in China’s PE/VC funds is the high returns offered by investment in the share market over the past several years.
Lei Lei said to Yicai that the continued growth of the sector is also significant of the rising sophistication of domestic investors, who are increasingly turning to PE/VC funds as an asset allocation tool.