[Value discovery ability is valued and the quality of investment banking practice has improved significantly]Recently, the China Securities Regulatory Commission issued the “Guidelines for Due Diligence of Sponsors” and “Guidelines for Working Papers on Securities Issuance and Listing Sponsorship”, and publicly solicited opinions from the public. The new work guidelines give full consideration to the novel, abstract, and complex conditions of the industry, and put forward verification requirements. At the same time, sponsors are required to give full play to their forward-looking role in the judgment of investment value and take their “recommendation” responsibility to a more important position.
Recently, the China Securities Regulatory Commission issued the “Guidelines for Due Diligence of Sponsors”, “SecuritiesGuidelines for the issuance and listing of sponsorship business working papers, and solicit opinions from the public. The new work guidelines give full consideration to the novel, abstract, and complex conditions of the industry, and put forward verification requirements. At the same time, sponsors are required to give full play to their forward-looking role in the judgment of investment value and take their “recommendation” responsibility to a more important position.
In the interview, many interviewees stated that they attach importance to the role of sponsors as “recommendation”, which requires investment bankers to consciously promote the transformation of inherent thinking to more market-oriented thinking in the sponsoring business, and raises questions about the quality of investment bankers’ practice Higher requirements also show that investment bank personnel’s ability to discover investment value has received further attention.
Not only to “guarantee” but also to “recommend”
Pay more attention to investment value discovery capabilities of investment banks
The new work guidelinesBrokerageThe investment bank’s practice quality puts forward higher work requirements, and raises the “recommendation” to a higher position.
“For a long time, due to the low pressure of underwriting of A-share IPOs, investment bankers paid more attention to materials and drafts during the sponsoring process, and achieved’guarantee’, but unconsciously ignored the’recommendation'”,Industrial SecuritiesRelevant persons said that considering that a market-oriented issuance and underwriting mechanism is an important part of the registration system reform, this new work guide has lifted the “recommendation” to a higher position, and it is also aimed at increasing the level of marketization of issuance pricing and promoting goodNew crotchThe issuance ecology is formed to ensure the in-depth advancement of the registration system reform.
In the opinion of a relevant person from a small and medium-sized securities firm in North China, sponsors and investment bank personnel are not only doing the most basic verification, but also digging and revealing the issuer’s investment value. To conduct more comprehensive, in-depth, and systematic research and understanding of the industry, requiring investment bank personnel to consciously promote the transformation of inherent thinking to more market-oriented thinking in the sponsoring business, and requiring investment bank personnel to have a higher level and more comprehensive quality; People and investment bank personnel must not only pay attention to compliance and whether the company can successfully go public, but also make judgments on the value of the company’s investment, and at the same time put forward new requirements for investment bank research on pricing and underwriting.
“This requires the sponsor not only to play the role of a gatekeeper, but also to judge and discover the value of investment, not only to’guarantee’ but also to’recommend’. Sponsor institutions should have knowledge of industry research and business model development. The forward-looking judgment ability has truly become the basis for investment judgment,” said an official from a small brokerage firm in North China.
Guojin SecuritiesThe relevant person in charge of the investment bank said that in the long run, the guidelines will help to truly realize the responsibility of various intermediary agencies, distinguish the boundary between the general duty of care and the special duty of care, and substantially reduce the unnecessary risk of investment bankers’ practice. In addition, the guidelines provide convenience for investment bankers to make requirements, and are expected to significantly improve the quality of the papers of each project team, especially those with less previous experience, thereby further improving the quality of practice.
A related person from a large brokerage firm in North China stated that as a “gatekeeper” under the registration system, the new work guidelines require sponsors to maintain the bottom line of “non-fake” and ensure the truthfulness, accuracy and completeness of information disclosure. At the same time, they should also have The value discovery capability should be based on the investor’s decision-making point of view, through the full verification of the industry format or issuer’s business that is novel, abstract, complex, scarce, or some specific business models to improve the pertinence and effectiveness of information disclosure. Only from the perspective of investors’ decision-making, the quality of information disclosure can be improved and the issuer’s “investability” can be guaranteed.
Strong supervision helps the transformation and upgrading of investment banking business
The overall practice quality of employees has improved significantly
In recent years, especially this year, the investment banking business of securities firms has faced strong supervision while welcoming huge room for development. Under high pressure, securities firms’ investment banking business has undergone significant changes in terms of business quality and business development methods.
“The most obvious change is that the overall practice quality and caution of investment bank employees have improved.”Industrial SecuritiesIn the eyes of relevant persons, the relocation and due diligence of intermediary agencies is an important foundation for the smooth implementation of the registration system and an important entry point and focus for the high-quality development of the capital market. In the context of strong supervision, on the one hand, the project team pays more attention to the completeness of the manuscript and the effectiveness of the verification procedures, and strives to identify and solve the core issues in the project at the beginning of the project. On the other hand, the various lines of defense under the investment banking business actively perform their responsibilities, avoid “sick declaration” situations, and exclude “problem companies” from the capital market from the entry point.
The above-mentioned person from a small and medium-sized securities firm in North China stated that the high-pressure situation of strong supervision has played an important role in improving the quality of securities firm’s practice and promoting the upgrading of investment banking business. Sponsors are required to comply with the “China Securities Regulatory Commission”SecuritiesCompany investmentBankThe relevant requirements of “Guidelines for Internal Control of Similar Businesses” establish and strictly implement various related systems for investment banking business to provide a strong guarantee for the quality of investment banking business practice; at the same time, at the project implementation level, project team members must have solid legal, financial and business practices. Basically, follow up the progress of the overall project in real time, fully verify and disclose all the key items of the project, and the sponsor representative must personally and substantively verify the verification work required by the regulatory agency, in strict accordance with the “Guidelines for Sponsor Due Diligence” and”SecuritiesThe “Guidelines for the Working Papers of the Issuance and Listing Sponsorship Business” implement due diligence procedures to fully control project risks, improve project quality and the quality of application materials, and prevent “passing through barriers with illness.”
AboveGuojin SecuritiesThe relevant person in charge of the investment bank said that from the current practice, the regulatory pressure has played an important role in improving the quality of securities firms’ practice and promoting the transformation of investment banking business. In his view, the practice habits of investment banks under strong supervision are undergoing profound adjustments. “Strong supervision directly increases the workload and pressure of investment banking work, but it forces the professionalism and professional ethics of investment banking practitioners to improve, promotes a virtuous circle in the industry, and avoids the phenomenon of bad money expelling good money,” he said. Strong supervision is also accelerating The development trend of the investment bank’s differentiation.
The above-mentioned person from a large brokerage firm in North China stated that since the pilot registration system, the investment banking business has established and improved the entire process of supervision before, during and after the event. The administrative, civil, and criminal trinity accountability mechanism requires investment banks to be professional Only by strengthening the level, internal control, etc., can we truly achieve “return to place and due diligence.” In its view, on the one hand, it is necessary to improve its professional level and continue to strengthen the construction of investment banking practice capabilities, while at the same time it is necessary to strengthen industry research capabilities to improve value discovery and issuance pricing; on the other hand, it is necessary to strengthen the construction of internal control systems to consolidate the quality of investment banking business The internal constraints of the company truly achieve “all-employee quality control and full-process quality control”.
(Article source: ChinafundNewspaper)
(Original Title: Value Discovery Ability Gets Attention, Investment Banking Practice Quality Improves Significantly)
(Editor in charge: 33)