Private equity funds in China have undergone more than a decade of exploration since first appearing at the end of the 20th century, and the regulatory system has gradually improved since 2014. Over these years, the first batch of private equity funds has entered their exit periods or reached fund term expiration, which has led to potential conflicts between some investors over the need to liquidate investments through withdrawal and fund management teams who need to extend their fund terms so as to maximize returns. In addition, the implementation of the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions and their supporting rules have emphasized deleveraging, which has placed requirements on traditional private equity fund investors such as banks and wealth management firms to conform within a prescribed period. All of these factors have led to a thriving secondary market for private equity fund interests.
