Research On Private Equity’s Industry And Investment Imiasc Selection

As a new investment and financing model, Private Equity played an importantrole in promoting China’s industrial transformation and upgrading especially insupporting the growth of SMEs. Considering that China’s equity investment fund isstill in the state of scattered, chaotic or excessive, it’s of important practicalsignificance for further regulating the effective integration of industrial capital andfinancial capital by probing the selection of investment industry and investment phaseand its impact on return.There is a close link between the incremental value of the invested enterprise andreturn. But enterprises face different risks in different industries and at each life cyclestage, so they may have different value drivers and value constitutes, that is to say,they have different value growth space. Therefore，I took the investment phase andindustry as the breakthrough point to explore the invested enterprise’s value growthcharacteristics as well as the relationship between the selection of industry,investment stage and investment returns. To demonstrate how the invest orientationaffect the investor’s profit, I chose57PE background enterprises on Shenzhen SMEBoard as research object to analyze the objects’ value growth characteristics in therecent4years after funds entered and the returns for the institution from theperspective of industry and investment phase. Further more, a quantitative analysismodel was constructed to estimate how much effect the choice of industry andinvestment phase contributed to investment return. After that I tried to compareChina’s PE investment orientation with other countries whose PE industry isrelatively developed, which can provide important references for the healthydevelopment of our country’s PE industry.Overall, the objects showed a strong growth after the PE entered and meanwhilethe objects in different industries or invested at different phase showed strongdifferences in incremental value and return for investment institutions. Investor’sreturn was positively correlated with the invested enterprises’ incremental value, soPE institution should pay attention to value creation and to effective integration oftheir resources to achieve common growth and development.