Research On Partner Of PE And Investment

PE partner’s follow-up investment can be identified as, in Limited PartnershipPE, the follow-up PE fund investment behavior of GP or LP upon objectiveinvestment, including enterprise, project etc. in the form of Limited Partnership. Thesubject of this sort of behavior is GP and related management team, LP and relevantparty, whose invested fund belongs to the property other than Limited Partnership PEupon objective investment such as company equity in the form of Limited PartnershipPE.As innovative method of investment by participants from PE market, in the sametime as a new structural development based on Limited Partnership PE and a sort ofinvestment behavior being widely adopted by capital market, under a circumstancelack of jurisprudence theory, this article identifies the behavior of PE Partner’sfollow-up investment through refining behavior features, comparing relevantconcepts, in the way of analyzing theory of modern enterprise Governance structuresuch as principal-agent relation, Residual rights of claim and Residual rights ofcontrol, etc. to search for the motivation of PE Partner’s follow-up investment andvalue of existence.Meanwhile, by analyzing the applicable legal frame, this articleraise a suspect of attempting corporate opportunity rule from the follow-up investingbehavior upon direct objective investment by GP and related management team.When LP and relevant party’s position is substantially transformed from principlerelation into consignee relation, the follow-up investment behavior is attemptingcorporate opportunity rule either.Once more with the method of conclusion, thisarticle summarize regulations and limitations of law about current PE Partner’sfollow-up investment behavior in our country. The conclusion includes refiningspecial features of partner’s identity under general regulations, instead of identifyingand framing PE Partner’s follow-up investment behavior in general. In conclusion,this article raise the point that it’s more proper to invest through purchasing ofLimited Partnership PE portion, and direct investing behavior as investor uponobjective investment is strictly prohibited. Meanwhile, standardize terms ofinvestment and exit criteria, like its transfer price, equity transfer period and pricing,etc.Actual follow-up investment behavior in the position of Limited Partnership PEprincipal will be regarded as the follow-up investment behavior of GP and relatedmanagement team, whose investment or exit criteria should be strictly limited. General LP and its relevant party’s follow-up investment could be determined inpartnership agreement, nevertheless, open announcement should be made all partnersindicating potential or unknown legal risks of PE Partner’s follow-up investmentbehavior.