BEIJING (Reuters) - China’s securities regulator on Friday revised rules to make it easier for select venture capital and private equity investors to exit high-tech pre-IPO investments on the secondary market, part of efforts to aid the coronavirus-hit economy.
China launched a scheme in 2016 aimed at shortening lock-up periods for venture capital (VC) funds that hold long-term investments in small, early-stage, hi-tech companies before their initial public offerings.
The China Securities Regulatory Commission (CSRC) improved the scheme on Friday, seeking to further expedite VC exits, “so that capital can be more quickly channeled back into start-up firms”.
“VC and private equity funds can also contribute to epidemic prevention and control, by lending more support to the real economy,” it said in a statement.
According to the revised rules, VC funds with more than five years of investment in a company are no longer subject to any share sale restrictions once the lock-up periods expire.
In addition, if pre-IPO investment is sold via block trades under the scheme, the buyer will no longer be subject to any lock-up periods, making such transactions more attractive, CSRC said.
The rule changes also lower the threshold for qualified investors, while expanding the scheme to include private equity investors.
The stakes held by qualified investors are very small, so the rule changes won’t evidently increase liquidity pressure on the stock market due to increased share sales, CSRC said.
Reporting by Samuel Shen, Roxanne Liu and Brenda Goh; editing by Nick Macfie