The Value Of Private Equity Funds To Create Its Listed Significance Analysis

Private Equity is a kind of product of financial innovation. It has developed since late 1970s. In broad sense, Private Equity (PE) includes venture capital, growth capital and M&A fund as three main categories of investment. Private Equity invests in non-public companies through various financial instruments. Limited Partnership is the most widely-used organization type for PE funds in the world. Traditionally, PE is known as Private. It raises funds from private investors, lack of information and data. However, with the new economic and financial developments, Private Equity funds and companies have to face problems of financing, liquidity, etc. Internationally PE has considered to be listed on the market but in some unique ways. Going public will enlarge their financing ways and enhance the capability of risk control. In June 2007, the Blackstone Group L.P., one of the greatest PE companies, finished its IPO in NYSE successfully, which drew the attention of the whole industry.This paper mainly focuses on Private Equity and reveals that Private Equity can help create value for portfolio companies, which is the core meaning of PE. And this paper discusses some issues related Private Equity going public, with analysis of some cases. PE to be listed will change way of financing but will remain its core function of creating value. In China, Private Equity is still a relatively fresh topic. China should develop the PE industry by doing institutional changes and promoting domestic PE management companies. Private Equity plays an important role in improving competitiveness of the industries and enterprises of China. Chapter 1 makes introductions of private equity investment. Chapter 2 tells how PE creates value. Chapter 3 is about private equity going public and Chapter 4 uses some cases to help analyze. Chapter 5 gives an outlook and some suggestions for Chinese PE industry.