Caixin
Jul 12, 2022 08:22 PM
FINANCE

China Pilots Giving Private Equity and Venture Capital Funds a New Exit Option

Chinese funds will have the option to distribute shares in a portfolio company to their investors, an alternative to the more common cash distributions. Photo: VCG
Chinese funds will have the option to distribute shares in a portfolio company to their investors, an alternative to the more common cash distributions. Photo: VCG

China’s securities regulator has launched a new pilot program that enables share distributions by private equity (PE) and venture capital (VC) funds, adding a much-needed alternative exit option for them.

The program aims to create a straightforward way for funds to distribute shares in one of their portfolio companies to their investors, who are usually limited partners. This type of non-cash payment, known as a distribution-in-kind, is common in overseas markets, but previously was much harder to do in China.

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