Summary of the Core Content
The story of Zhuque Fund is a case of a “top-tier private equity fund turning into an mediocre public offering”: Founded in 2007, Zhuque Private Equity became a benchmark in the industry due to its conservative and focused approach (managing 15 billion yuan in assets and winning the Golden Bull Award eight times). After transitioning to a public offering in 2018, its scale briefly reached 29.4 billion yuan thanks to a bull market, but it subsequently declined below the 10-billion-yuan mark due to market changes, personnel turmoil, and poor performance. The fund also suffered from brand backlash due to certain strategic moves, such as “showy” share purchases by its management. It serves as a typical example of a company that failed to adapt to new regulations and moved from glory to struggle during the wave of private equity funds transitioning to public offerings.
Detailed Analysis
1. The Private Equity Era: Success Through Conservatism and Focus
Zhuque’s success can be attributed to two key factors: conservatism and focus:
- Conservatism: The fund avoided taking short positions or borrowing money, prioritizing safety at all times. For instance, during the 2008 financial crisis when the A-share market plummeted by 70%, Zhuque’s products only lost less than 30% in value, outperforming the broader market.
- Focus: The fund invested solely in companies it had thoroughly researched, much like a skilled traditional Chinese medicine practitioner who diagnoses and treats patients before making a treatment plan. In 2010, when the total private equity industry was just over 100 billion yuan in size, Zhuque had already managed 5 billion yuan and achieved “absolute returns” for three consecutive years (earning profits regardless of market conditions).
- The fund was also pioneering: It was one of the first in China to offer quantitative hedge products in 2011 and machine learning-based CTA strategies in 2015, positioning it as a leader in the private equity sector.
2. The Decision to Transition to Public Offerings: Trade-offs Behind the Attraction of Licensing
Why did Zhuque choose to switch from private to public offerings? The benefits were enticing:
- Public visibility: Private funds cannot advertise, while public offerings can, making it easier to attract individual investors.
- Access to large funds: Institutions such as social security and pension funds invest only in public offerings.
- Potential for growth: Public offerings allow for expansion through various channels and marketing strategies.
However, there were drawbacks: Zhuque had to liquidate its private equity products or transfer them to dedicated public offering accounts, which led to a temporary shrinkage in scale. When it obtained the public offering license in 2018, everyone saw public offerings as an opportunity for significant growth, but few expected the subsequent challenges.
3. The “Bull Market Curse”: The Hidden Risks of Rapid Expansion
The A-share market from 2019 to 2021 was highly volatile, and Zhuque’s public offering assets soared from 1.4 billion yuan to 29.4 billion yuan (a tenfold increase). This rapid growth posed problems:
- Management challenges: The fund’s infrastructure (management team and operations) was not prepared for such rapid expansion; it was like a small restaurant suddenly becoming part of a chain, with insufficient staff and resources to maintain quality.
- Performance decline during a bear market: When the market turned downward in 2022, Zhuque’s funds suffered significant losses—seven equity products lost a total of 2.1 billion yuan. Although Zhuque had experienced a bull market before (in 2007), its focus on growth rather than long-term returns led to substantial losses during the bear market.
4. Personnel Issues: Internal Struggles That Damaged the Fund’s Performance
Zhuque’s public offering division faced frequent management changes:
- High turnover: The first general manager left within half a year, and the chairman and general manager exchanged roles several times; four chairmen and four deputy general managers were appointed in just a few years.
- Core investment team departure: The original equity investment director resigned, and founder Li Hualun withdrew from daily management, leaving only Liang Yuejun to oversee the fund. His performance as a manager was poor, leading to his resignation as all fund managers.
Unstable leadership caused confusion within the team, affecting its cohesion and strategy, which in turn undermined investor confidence.
5. Brand Damage: The Toll of Poor Performance
Zhuque’s former reputation as a leader in private equity turned into a liability after the transition to public offerings:
- Misleading practices: In 2024, the fund announced a 20 million yuan purchase of its own shares but simultaneously redeemed 24 million yuan, creating an impression of insincerity among investors.
- Deteriorating reputation: From a respected private equity firm to a public offering that underperformed, Zhuque’s image suffered greatly—similar to a top student failing an exam and becoming more criticized than a mediocre one.
Conclusion
Zhuque’s story highlights that a license is not a guarantee of success in the public offering sector, and transitioning from private to public offerings does not automatically lead to easy profits. Past successes (such as achieving absolute returns) may not be transferable to the new environment. Failure to adapt to new regulations can turn past achievements into obstacles. This case serves as a warning: The journey to becoming a successful public offering firm is just beginning, and one should not let past glories obscure the path ahead.