The Study On Private Equity Funds In China

Private equity funds are such kind of funds, which invest in the unlistedenterprises’ equity. Modern private equity funds came from United States. Afterdecades of development, private equity funds have become the third most importantfinancing method, besides IPO and bank loans. Compared with in Europe and UnitedStates, private equity funds started later in China. Until1985, the first Private equityfund in China was launched. However, Private equity funds develop very quickly inChina, no matter in scale or quantity.In China, there are two serious problems, which could do harm to the steadydevelopment of China’s economy, the financing difficulties of Small andMedium-sized enterprises and nowhere to invest of private capital. How to deal withthese two problems would be related to the situation of the development of China’seconomy in the future. However, private equity funds provide a method to solvethese two problems. Private equity funds absorb the idle capitals and invest thesecapitals into the real economy. Private equity funds help the adjustment of theindustry structure of China, accelerate the upgrade of the industry, and find out theoutstanding enterprises. Private equity funds have done great donations to thedevelopment of China’s economy. In this passage, a great deal of data has been collected, in order to study theinvestment and investment income of private equity funds in China. In one respect,the investment situation of private equity funds in China would be studied andrevealed through the analysis of the select standard of the invested enterprises,investment area, investment industry, investment price in Growth Enterprise Market,investment income and investment cycle of private equity funds. In the other respect,to reveal the characteristics of investment income of private equity funds in China,correlation analysis would also be used in order to study the relationship between theinvestment income of private equity funds in Growth Enterprise Market and thebasic situation of the invested enterprises during the listing period, investment priceof private equity funds, the issue prices of the invested enterprises, the investmentcycle of private equity funds. In the passage, factor analysis would be used to formthe comprehensive evaluation index, which could represent the basic situation of theinvested enterprises during the listing period. The results show that there is norelationship between the investment income of private equity funds in China and thebasic situation of the invested enterprises during the listing period, negativerelationship between the investment income and the investment prices of privateequity funds in China, positive relationship between the investment income ofprivate equity funds in China and the issue prices of the invested enterprises, positiverelationship between the investment income and the investment cycle of privateequity funds in China. The results reveal the characteristics of private equity funds inChina, and reflect the weakness of China’s capital market.In the final part of the passage, combined with the problems of Private equityfunds and financing enterprises at present, such suggestion to private equity fundsand financing enterprises would be given.The purpose of the study is to make the investor more familiar with privateequity funds and to do some donation to the development of private equity funds inChina.