Analysis Of The Private Equity Operation Mechanisms

Private Fund is a new development of less than 10 years in China, compared with over 50-year evolution of Hedge Fund (a typical Private Fund) in U.S.A.. Nevertheless, its rapid growth has imposed a huge positive & negative impact on China Security Market. The proper authorities differ from each other on its emergence. Then, what can we do with the emerging Private Fund in China? This paper tries to offer a detailed and stringent analysis to meet this purpose.This paper is composed of 5 chapters.Chapter 1 presents a brief but precise explanation of Private Fund and makes a comparison with Public Fund, aiming to a better understanding of its significance.Chapter 2 provides a clear description of Private Fund development in the current financial markets of such advanced countries as U.S.A. and explores thoroughly its operation mechanism, income distribution mode and organizational form etc., hoping to draw forth some valuable lessons for reference therewith.Chapter 3 extends an overall perspective of China Private Fund with analysis of its development history, origin, fund scale and investment, organizational form, operational mechanism and its existing problems.Chapter 4 plans to focus on the income distribution mode in China from the angle of Game Theory and Information Economics. By comparison, income share mode is superior to managerial fee mode owing to its better incentive mechanism, therefore, demonstrating the cause of more rapid growth of Private Fund than Public Fund in China.Chapter 5 sets forth the necessity and inevitability of China Private Fund legalization and makes some suggestions in policy.This paper indicates that the further mergence of China financial market into international financial markets will surely promote the rapid and healthy growth of China Private Fund.