Research On Current Situation And Mode Of The Private Equity Business In Chinese Trust Company

With the promulgation of 《Measures for the Administration of the Trust Companies》and《Measures for the Administration of the Trust Companies’Trust Plans of Assembled Funds》 by China Banking Regulatory Commission in March2007, the Chinese trust industry has been experiencing an unprecedented development. At the same time, the function of positioning and business direction of the Trust Company has been undergoing a fundamental and disruptive change that the gradual transformation from the original financing institutions to the professional wealth management organization. In June2008, CBRC issued 《Guidelines for Trust Companies to Operate the Trust Private Equity Investment Business》, which specified the path of development and provided a institutional support for trust companies to carry out the private equity business.Trust companies have a unique advantage to carry out the private equity business. Private equity investment which is under trust system has strengthens such as professional management, lower cost of operation, a high degree of capital security, relieve from double taxation and so on. For this reason, the private equity business is doom to be a significant way for Chinese trust companies to move back to basics.This paper will focus, from the perspective of a trust company, on a detailed analysis, classify and summarize of the private equity business’s current situation through the research on specific operation of practice, and then refining a general model for current business. On this basis, along with analysis on current problems, the existing model will have further rational optimization, and each module will be described in details.As a new type of finance theory, the introduction of Mezzanine theory to China dose not have a long time, but the theory has experienced wider application and further development, especially in the trust industry. Although there is no existing case that Mezzanine finance theory has been applied to private equity business by trust companies, this paper attempts to rebuild the model on the basis of Mezzanine finance theory through studying the theory and learning from other success cases, in hope of providing a new idea to the private equity business in trust companies.