Before Our Country Enterprise Listed Private Equity Pricing Factors Research

In recent years, private equity investment has gradually become a hot topic in China’s capital market. A lot of enterprises have raised funds and increased their value by the way of using private equity, which has also promoted the development of private equity investment industry in our country. Especially with the opening of Agency Share Transfer System and Growth Enterprises Market, China’s multi-level capital market system have been established, which has also broaden the investment channels and optimized the withdrawal channels for many private equity funds. As a result, private equity investment in China has entered a new round of rapid development period.Since different private equity funds make investment in different stage of an enterprise, the private equity capital can be divided into different types. Among them, The Pre-IPO capital is regarded as previous stage of Initial Public Offerings. The success of Pre-IPO investment largely depended on the price of the private equity which is for traded. However, theoretical research on the price of the private equity is far from enough in our country at present, and this is not good to the development of the private equity investment. In the light of this situation, this paper discussed some related factors as well as some specific pricing methods in the pricing process of the Pre-IPO investment from a perspective of private equity investors.This paper selected some companies which private equity investors had make investment before IPO and successfully exited after IPO as research samples. By the correlation and regression analysis, this paper confirmed the company’s earnings per share, the average price-earnings ratio and the IPO prices were positively correlated to the Pre-IPO price, and the IPO time was proved to be negatively correlated to the Pre-IPO price. At the same time, this paper also combined with the theoretical and standardized analysis and pointed out the Pre-IPO price was influenced by the growth potential of the target company, the characteristics of the industry, the quality of the management team, the negotiation ability and skills of private investors, and other non financial factors. On this basis, this paper finally suggested that the pricing process of the private equity before IPO should be combined with financial and non-financial factors, and should take a variety of evaluation methods.The greatest contribution of this paper is that it systematically analyzed the financial factors and non-financial factors in the Pre-IPO price, and provided some methods of pricing the private equity before IPO. Besides, Besides, this paper also discussed the development trend of China’s private equity market, and finally offered some suggestions on how to make further progress in pricing the private equity which is for traded.