Research On The Internal Capital Market Of MD Diversified Energy Group

Internal capital market has got more and more attention as the positive role in these aspects such as capital accumulation, capital allocation and incentive constraints, since the diversification strategy of enterprise group implemented. After the power system reform in2002, the five major power generation groups have evolved into large diversified energy groups as"the foundation of coal, the core of electricity"through capital operations. Because the external capital financing cost and difficulties increased caused by financial crisis, the five energy groups paid special attention to the role of internal capital market in allocating capital. However, the relevant theoretical researches are not systematic in-depth. Therefore, the topics and research of this thesis have strong practical significance.This article firstly defined the basic characteristics of Diversified Energy Group and selected the efficiency evaluation model, on basis of systematically summing up the related literature. The paper proposed methods of promoting internal capital market of MD Diversified Energy Group as follows:the unified financing investment, the bill discount financing of group, the behavior of the capital allocation in product exchanges, group capital in the unified management, the unified arrangement of the projects, the unified marketing, the standard cost basis for the comprehensive budget management. And the calculations of internal capital market efficiency shown that, the group frequently implemented the internal capital allocation through the internal capital market. In the process of internal capital allocation, the principle of efficiency gave place to final controller’s "strategic" needs. At the same time, the tendency that final controller "conveying interests"through the internal capital market from listed company, should be attached. Finally, summed up the successful experiences and the problems of MD Diversified Energy Group. According to the group’s problems, combined with the relevant basic theory, this article put forward the following measures improving the internal capital market operations:breaking industry bottleneck, promoting industrial cooperative effect, establishing internal market price, improving the financial synergy effect, promoting the group listed as a whole, reducing the management cost, implementing multiplication financing strategy, constructing the Internal Capital Market operating monitoring system.