Research On The Investment Effect Of Private Equity Funds To The Gem Listed Companies In China

On June 30 th, 2014, China Securities Regulatory Commission has enacted The Interim Measures for the Supervision and Administration of PE Fund officially, which means PE was included in real law regulation, also makes it clear the confidence and determination of Chinese government in PE fund industry’s innovation and development. Since the concept of venture capital has introduced into China, PE investment in China has experienced 30 years of exploration. At the beginning, flood of international PE fund arrive in and now domestic PE fund is developing rapidly, our country’s PE fund industry has made higher demands on capital market. The GEM in our country had opened in 2009, this provides a new withdrawal channel of PE fund, also improve the dynamic of PE fund industry in our country. From 2009 to the end of 2014, there are 239 public companies which have PE fund background, accounted for 58.9 percent of all. The theory circ le generally believed the effects of PE fund investment refers to the function and influence of companies after being invested. Researchers always use IPO underpricing degree and business performance to reflect the analys is, PE fund has become one of the important parts of capital market in China, its size and quantity are far more than any time before. However, whether PE fund can promote the development of small and medium-sized enterprises and whether it could effectively play its role of special financ ial instrument in emerging market which has set up only 5 years, has attracted more and more concern. How to help a potential but private company to obtain PE fund, how to achieve “win-win” situation between consigner and consignee by using the link role of PE, how to take advantage of its function of risk management under the environment of the rapid development of multi-level capital market, these discuss has significance both in theory and practice.This paper is based on the historical practice of our country’s venture capital, through introduction of the development and present practice of PE fund in China, defined the functional conception of our country’s PE fund again. Based on the theory c ircle studies in four investment effects of PE fund, this paper select 406 public companies in GEM from October 23 rd, 2009 to December 31 st, 2014 as sample. Classified those companies according to their PE background and different levels of PE’s reputation, using Mann-Whitney U test and Multiple Regression analys is model, by using IPO under-pricing degree index to study the moment of IPO, also the index of profitability, solvency, developing and operating ability to study companies’ performance after IPO. Through the difference significance test, it systematically studies the effect of PE fund on GEM in China and finally gets the conclusion that there’s no adverse-Selection effect, certificating effect and monitoring effect, but obvious reputation effect on Chinese GEM. The author thinks it is associated with the limit of factors such as market and government intervention. In addition, PE firms which have high reputation can make accurate judgment to the prospect of those public companies, and promote them to achieve better performance after IPO. Finally this paper will put forward some suggestions on some aspects, such as PE’s function definition, the regulation of financial markets and general partner, those suggestions play a positive role to the future development of PE fund in China, financ ing of growth-type enterprise and the accelerate establishment of multi-level capital market.