Risk Assessment Of Private Equity Project

With the rapid development of China’s private equity investment projects in recent years, the research on private equity fund investment has become more and more in-depth. From the perspective of the nature of private equity investment, belonging to the risk management industry, therefore, the risk management for private equity investment projects becomes the core of the study of private equity. In-depth study of risk management of private equity investment projects is helpful not only to expand the scale of private equity investment and improve the efficiency of private equity investment management, but also helps to promote the development of China’s GEM market. Thus this kind of studies usually can achieve results with both theoretic and application significance.Based on an investigation of the background and a literature review, this paper uses risk management theories on private equity investment, combines theoretical and empirical methods and conducts quantitative and qualitative analysis, for the purpose to provide assessments for three investment projects(non-ferrous metals, electronics, agriculture project). More specifically, one the one hand, this paper establishes a hierarchical structure on 5 categories of risks(technical risk, management risk, financial risk, market risk, and policy risk) and solves for the hierarchical weight system with the analytic hierarchy process(AHP). On the other hand, for each of the three projects, this paper applies the methodology of the fuzzy comprehensive evaluation to explore the levels of each risk category. Further, with the weight system and the risk exploration, this paper gives the corresponding risk assessments in terms of weighted risk scores. The data for both AHP and the fuzzy comprehensive evaluation are collected via surveying experts in the private equity investment industry and managers for specific projects, respectively. Finally, with the risk scores and the different characteristics of the three projects, the corresponding risk response strategies are proposed.This paper includes the following chapters:Chapter 1 mainly introduces the background, significance, domestic and foreign research status, the main content and methods, as well as the innovation of the study.Chapter 2 describes and analyzes the private equity investment project risk assessment theory, the content and methods of risk assessment.In Chapter 3, on the one hand, the main risk factors of private equity project are summed up in theory; on the other hand, the level structure of risk factors is established based on the specific situation of the three projects in this paper.Chapter 4 uses AHP and the fuzzy comprehensive evaluation to evaluate the risk of three projects and puts forward the countermeasures and policy recommendations.Chapter 5 gives the main conclusions of this paper and points out the further research directions.The novelty of the above results can summarized as follows. Using AHP and the methodology of the fuzzy comprehensive evaluation, on the one hand, based on a survey of top managers of private equity investment industry, regulators and college professor, this paper establishes a consistent hierarchical weight system of risk factors of private equity investment projects risk structure; on the other hand, based on the a survey of private equity investment project managers, this paper explore the risk levels of risk factors for each of the three specific projects with the fuzzy comprehensive evaluation(fuzzy relation matrix). With the weight system and the fuzzy relation matrix gives the corresponding comprehensive risk assessments in terms of weighted risk scores for each of the three projects, and thus reveals the main factors influencing the risk of the project in question. Finally, this paper gives the corresponding management recommendations.The above results can provide a useful reference for risk managers of private equity investment projects.