Research On The Constituent Elements Of Private Equity Investment In China

As an innovative means of financing, PE gradually forms a huge industrial system on a global scale; it creates significant economic effect and plays an important role in optimizing the allocation of resources, expanding SMEs’ financing channels and stabilizing financial market which is remarkable. International network parvenus such as Google, Yahoo and Microsoft do benefit from PE, besides, Alibaba, Shanda Networking, Shuanghui, Harbin Pharmaceutical and other well-known domestic enterprises need PE support to be behind them. Accompanied by large-scale international PE funds settled in2004, China has set off a tidal wave of developing PE and become one of the important components of the Asia-Pacific region’s active PE market. However, the PE in China starts relatively late and is still in its infancy so that there are some practical problems and obstacles to development existing in actual operation processes of raising funds, selecting projects, follow-up management and exit mechanism, which greatly restricts the development of the PE in China.It’s necessary to study the operation process of PE based on the element and analyze the elements in financing, investment, ongoing management and exiting respectively to promote the further development of domestic PE. Firstly, based on the relevant theoretical studies at home and abroad, the thesis introduces basic theory of PE and defines basic elements from the perspective of investment management which will lay a solid theoretical foundation for the study of the role played by the elements in the operation process. Next it analyzes concretely the role played by each element in the operation process and the relationship between the elements. Then the thesis points out the influencing factors that restrict the elements of domestic PE to promote and summarizes the existing problems of the elements at the same time. On the basis, the thesis proposes improvement strategies to promote the development of PE in China on two aspects of improving the legal environment and focusing consciously on the development of the elements, in order to help the PE operation process can be better implemented and better serve the national economic development.