The Study Of Risk And Return Relationships In China’s Private Equity Investment Market

China’s Private Equity market is going through a3rd investment wave since2004. Firstly, compared to mature capital market, there are3typical risksexist in China’s markets: the over-popularity of Pre-IPO mode, industryconcentration of capital invested, limited choice of exit channels. Secondly,comprehensive investment return rate data about the non-transparent PEmarket is collected. Thirdly, empirical analysis is performed using2933setsof data to verify the influences of investment length, industry, exit channelchoice and secondary market index trend to exit returns, and found thatlonger investment length, better secondary market and exit choice of IPOwill have a positive influence to return rate, while industry only has a verylimited influence. Finally, combined the empirical analysis results andinterviews with local VC/PEs, normal practices performed in real Chinamarket to balance risk and return are improvement of investment processand signed terms of pre-investment agreements.