(Yicai) Dec. 8 -- The number of private equity and venture capital managers in China has fallen by over 10 percent between January and September, mainly because of tightened regulations and difficulty in raising money.

There were 12,972 private equity and venture capital managers in China as of Sept. 30, down by over 1,600 from the same period last year, according to a research report released yesterday by the Shanghai Private Equity Association, Deloitte China, Shanghai Free Trade Zone Equity Fund Management, and other industrial bodies.

Shanghai is China's financial center and boasts the highest number of private equity managers. Twenty percent of the country's private equity managers are incorporated in Shanghai, with their funds under management accounting for 25 percent of the total, the report also showed.

Stricter regulations were the main reason for the elimination of many financial institutions in the past two years, Huang Yan, vice president of the SHPEA, told Yicai. Meanwhile, this year's decline in the number of financial institutions is because of strong competition, difficulties in raising money, and exit from investment projects, Huang noted.

The number of operational private equity managers registered at the Asset Management Association of China totaled 21,730 as of Sept. 30, data from the association showed on Dec. 6. The figure fell by almost 2,000 from Dec. 31.

While the number of fund managers has dropped to some extent, the number and size of funds they manage grew, said Lydia Chen, managing partner at Deloitte China. Eliminating the inferior fund managers and keeping the superior ones is a normal process for the industry's transition to high-quality development, she added.

But China's equity investment industry is still far from high-quality development, said Liu Jianjun, a professor and doctoral supervisor at the College of Finance and Statistics of Hunan University. The United States has been having about 4,000 equity and venture capital managers for a long time, with the number in China being four times higher, Liu noted.

The private equity and venture capital sectors will enter a new normal next year, mostly driven by scientific and technological innovations, according to the report. Investing institutions will focus more on cutting-edge scientific and futuristic industries, such as large language models and brain-computer interfaces.

Editor: Futura Costaglione