Research On The Using Effects Of GEM Excess-raised Funds

For the purpose of building a multi-level capital market and improving thestructure of capital market in China, our country formally launched the GrowthEnterprise Market(GEM) in October30,2009.Today, after nearly four years’development, the number of listed companies has increased to355from the initial28,the total raised funds amounted to214.918billion, the rapid development of the GEMhas provided a good financing platform for high-tech companies and medium-sizedenterprises(SMEs),and vigorously promoted the development of them, but at the sametime, the development of the GEM also appeared many problems. A series of problems,especially high excess-raised problem has brought a high risk to the future health of theGEM market.Many scholars at home and abroad has studied on the excess-raised issues, notonly at the institutional level using IPO Pricing Theory and IPO Under-pricing Theoryto analyze, also examined the motivations and the usage and efficiency of excess-raisedfunds, the study found that: most of foreign scholars study of excess-raised questionsinto the study of IPO under-pricing. The domestic scholars mainly researched on theGEM excess-raised problem, found that this is a widespread problem in GEM, and theuse of excess-raised funds is low efficiency.In this paper, on the basis of previous studies, for the excess-raised phenomenon ofGEM, the author first analyzed the causes and effects of excess-raised funds, the studyfound that the reasons of generating excess-raised issues mainly from the followingaspects: the economic situation improves, industrial restructuring and other macro-levelreasons; imperfect IPO pricing mechanism; investors own irrational investmentbehavior; and stakeholders involved in the release process pursued their own interests.Analysis of the influence of GEM excess-raised problem is separately from the society,investors and listed companies, the phenomenon of excess-raised not only waste socialresources, harm the interests of investors, but also have an adverse effect on the listedcompany’s own development.Then the author using the survey data to summarize and analyze excess-raisedphenomenon in detail, found that GEM excess-raised has become a common problem,and the later use of excess-raised funds is also not standardized, the overall efficiency is low. This paper focuses on the frequently use of excess-raised funds for a high premiumacquisitions.The excess-raised question of GEM is analyzed systematically with the method ofcase analysis in this paper, and choose the Ultrapower Company as the representativestudy. On the basis of the understanding of the basic situation, financial situation andindustry overview, analyze the Ultrapower’s IPO on the raised position and the use ofraised funds, then focus on the event of using the raised funds to acquire the Tianjinshell wood company with a high premium, and analyze the possible problems of thiscase and put forward some recommendations of the raised funds.In the end, on the basis of the experience of foreign mature capital market andcombining with China’s specific situation, we take up some suggestion in solving theusing of excess-raised funds. Including the system, sponsors and investors. As to the useof excess-raised funds, we can hire a dedicated team to manage the companyexcess-raised funds to protect the interests of small investors.