(Yicai) July 29 -- Chinese public fund institutions have slashed their investment in the private placements of shares by mainland-listed businesses this year mainly because of steep losses stemming from taking part in this type of fundraising.

Fund managers, securities companies, and other institutional investors allocated nearly CNY17.9 billion (USD2.5 billion) to non-public share offerings from Jan. 1 to July 23, down 68.5 percent from the same period of last year, according to data compiled by Choice.

Nineteen public fund institutions participated in 45 placements this year as of July 23, investing a combined CNY14.2 billion, according to data from Simuwang.com, a private equity ranking network. Investors made money in only six of these fundraisers.

The share sales that resulted in the deepest losses were those of HY Solar, Yingkou Jinchen Machinery, Qumei Home Furnishings Group, IKD, Jifeng Auto Parts, and Shangpin Home Collection Group. Investors lost CNY149 million (USD20.6 million), CNY144 million, CNY116 million, CNY86 million (USD11.9 million), CNY64 million, and CNY63 million, respectively.

The private placement market has underperformed for the past three years, as evidenced by the decline in the CNI Non-Public Offering Index, according to a manager at TX Investment Consulting. The size of the placements within the index was also 15 percent smaller in the first half of the year compared with a year earlier, the person added.

From the perspective of listed companies, private placements cost much more than other financing methods, so they are less inviting, a public fund manager noted. They are usually discounted sales that dilute the rights and interests of existing shareholders, so businesses prefer to issue bonds or loans to raise funds for high-quality investment projects, he said.

Editor: Futura Costaglione