Study On The Operation In The Field Of Private Equity Case Of Government Guiding Fund

Private Equity was first originated in the United States. As a combination of finance innovation and industry innovation, Private Equity provides the new-arising corporations with precious money for the creating and maintaining their business. The immerging of new industries are accelerated, industrial structure and consumption scale are updated, job opportunities are increased, and they are all connected with Private Equity. The experiences and statistical evidence of developed countries indicates that, Private Equity plays a significant role in terms of economic and social impact. This is echoed with the government’s role of social and economic administration, which then leads to the discussions of government’s participation in Private Equity and various models, among which, Government Leading Fund takes a seat.Due to its special position hold in politics, economy, and society, government needs to take their advantage in information to deal with the malfunction of the market and to attract public capital with leverage, while avoiding direct competition with private sectors, thus leading unexpected situation where competing with the public and forming "knock-out" effect. Therefore, many constraints are led upon Government Leading Fund. Meanwhile, there is only a short period of time when Government Leading Fund is introduced to China market. Currently, Government Leading Fund is mainly responsible for guiding entrepreneurship and strategic investment. The mechanism suggests that pure polity incentive funding is still the majority, Government Leading Fund is still far from marketization.FOFs itself is a mature product of the development of Private Equity, it determines the quality of the fund by professional due diligence and fund team selecting process, controls fund operation by constant monitoring the fund performance,also spreads the risks effectively and manages investment portfolio by diversified investing strategy. Although actually operated in ways of FOFs, Government Leading Fund per se is not developed from marketization, which means the very natures of them are materially separated in China. The very essence lies here, the gene for Government Leading Fund is in government, while the gene for FOFs is in market. Either to choose between government or market, or find a new way through participation, how Government Leading Fund would evolve into FOFs is a vital topic in its development.One particular Government Leading Fund is selected as research subject in this dissertation. The research is conducted in management interviews, literature analysis, industry analysis, market research, and data analysis. Basic understanding of Government Leading Fund and FOFs are summarized, insight views of the operation of Government Leading Fund are provided, and the approach for marketization of Government Leading Fund is finally proposed.This paper comprises six sections, described as follows:Chapter One:Introduction to Private Equity in economics, leading the theories and participation of Government Leading FundChapter Two:Introduction to domestic Government Leading Fund in ways of FOFs, including development and policiesChapter Three: Operation of Government Leading Fund, including structure, financing, management, investment methods, investment constrains, exit way, etc.Chapter Four: This is to be the highlight of this dissertation. In depth discussion and analysis for corporate structure, internal operation mechanism, and portfolio management in one in-operation Government Lead Fund as a subject.Chapter Five: Propose an approach for the marketization of Government Leading Fund, and analyze market strategy in relation to government guiding function.Chapter Six: Based on above discussions, providing judgment to the approach of Government Leading Fund.