Analysis of the Impact of the Qianhai Private Equity and Venture Capital Share Transfer Pilot on Liquidity and Exit Mechanisms in China's Primary Market

Shenzhen’s launch of the private equity and venture capital (PE/VC) share transfer pilot in Qianhai, part of its foreign investment attraction policy, will reshape China’s primary market ecosystem from both liquidity and exit mechanism perspectives. The current market context shows that traditional exit paths (IPO, M&A) relied on by the global PE/VC industry face challenges: global IPO market recovery in 2025 fell short of expectations [3], while M&A activity was constrained [1]; China’s PE/VC industry is similarly affected, with a single exit structure [2]. Meanwhile, China’s RMB-denominated PE secondary market has grown rapidly: 731 transactions were completed in H1 2025, totaling 77.3 billion yuan (≈11 billion USD), a historic high [5], providing a market foundation for the pilot.

The pilot will drive a shift in China’s primary market exit mechanisms from a “dual” (IPO/M&A) to a “triple” (IPO/M&A/share transfer) structure—aligning with the global trend where secondary markets (e.g., tender offers) have become key exit supplements: in 2024, tender offer financing for the world’s top 10 VC-valued enterprises exceeded the total of同期 tech IPOs [2]. Additionally, as part of financial opening-up, if foreign investors are allowed to participate, the pilot could offer new investment channels for the global PE/VC industry’s 2.62 trillion USD in idle capital [1], further activating the market.

1. Market Demand Drives Pilot Value
   : Global and domestic traditional exit path challenges, combined with a scaled secondary market foundation, give the pilot clear market demand. This is not an isolated policy but an important adjustment to China’s primary market ecosystem to adapt to global exit trends.
2. Synergy of Financial Opening-up
   : The pilot aligns with Shenzhen’s foreign investment attraction policies and financial opening measures (e.g., bank card clearing, commercial endowment insurance). If foreign investors are allowed to participate in share transfers, it will effectively connect global liquidity and enhance the appeal of China’s primary market to international capital [6].
3. Targeted Solution to LP Liquidity Pain Points
   : Current PE/VC fund return cycles are prolonged, leaving LPs facing liquidity pressure [1][3]. The pilot will provide more flexible exit options for LPs, accelerating capital turnover to improve overall primary market liquidity efficiency.

• Liquidity Enhancement
  : Offers new exit channels for LPs, accelerates capital circulation, and eases primary market liquidity tension [5].
• Diversified Exit Mechanisms
  : Breaks the traditional IPO-dependent exit structure, reduces exit risks, and enhances industry anti-cyclical capacity [2].
• Foreign Capital Attraction
  : As a window for financial opening-up, the pilot may attract global institutional capital (e.g., European pension funds) to re-evaluate China PE investments [6].

• Rule Uncertainties
  : Unpublished detailed rules (e.g., participant eligibility, trading rules, valuation methods, foreign investment thresholds) will impact market participation意愿 [3][4].
• Market Maturity Challenges
  : China’s PE/VC secondary market is in its early stages; supporting services (e.g., valuation systems, intermediary institutions) need improvement, and the pilot’s effect may be constrained by market maturity [5].

Based on public market data and policy background, this analysis concludes: The Qianhai PE/VC share transfer pilot is a key initiative for China’s primary market to address global exit challenges and promote financial opening-up. It will bring positive industry impacts by diversifying exit mechanisms and enhancing liquidity, with potential to attract foreign capital. However, the pilot’s effect depends on subsequent rule clarity and market maturity. The market is generally optimistic but requires close monitoring of policy implementation details and market reactions.