As disclosed by Mr. Shaojie Wang, the president of ZVCA, a large M&A Fund for PE Secondary Market is going to be initiated, with several top asset management firms, enterprises and banks participating. ZVCA played an essential role, served as an initiator and an important liasion on this ambitious project. 

The fund plans to raise a total of US$16M for mergers and acquisitions over PE's investment projects, as well as buyouts for LP shares.

NYPPEX, the No.1 PE Secondary Market Exchange in US, also participates in this project. This April, ZVCA signed a memorandum of understanding with NYPPEX, in which they reached consensus on China PE secondary market platform building, as well as agreed on exploring the possiblity of establishing a secondary market fund which use RMB/USD in parallel.

Mr. Bo Yu, Advisor of ZVCA, vice president of Beijing Financial Assets Exchange (CFAE), president of ZVCA, confirmed the fund to be "at planning stage". 

PE secondary market refers to the buying and selling of pre-existing investor commitments to private equity. Sellers of private equity investments sell not only the investments in the fund but also their remaining unfunded commitments to the funds.

The PE secondary market of China is still at the beginning stage, and faces a series of obstacles in its development: a reliable evaluation system is missing, there are few exchange platforms, transaction and tax procedures are complicated... As of now, PE secondary market transactions are mostly conducted between individuals and seldom involve institutional players.

However, since Chinese government has suspended IPO nationally, Chinese PE/VC's are forced to explore different ways of exit, and LPs are growing impatient in exiting some matured investments. If this secondary market fund comes into play, it is going to provide great opportunities for investors.

This april, the first PE secondary fund of China, "Gefei S Fund", with an approximate size of US$1M, was raised in only a matter of two weeks. Last October, CFAE also conducted its first property LP share transaction.

However, evaluation standard is still the biggest concern in China PE secondary market. It remains to be seen how this puzzle is going to be resolved.