A Study On The Private Equity Investment In The Internet Industry

PE has been very interested in China’s Internet industry for a long time. It is the veryinterest from PE that Chinese Internet industry has achieved such amazing results within 20 years. Nowadays, with the rapid revolution of industry construction, the transformation andupgrading of the Internet industry, and the great development of capital market reforms, it is arare opportunity for PE to develop in the Internet industry. As a result, it is a worthy questionto explore: how to seize the opportunities for PE and respond to risks.Firstly of all, this paper introduces the development of PE in Chinese Internet industry.Then figures out some reasons why Chinese Internet companies prefer to oversea listing andtheir patterns according to the characteristics of choosing oversea listing. More specially, takeBeijing Tensyn Digital Marketing Technology Joint Stock Company(“Tensyn Company”) forexample. The story of Tensyn Company elaborately exemplifies the entire process and causesof PE investing in the Internet industry. It focuses on the control structure.Next, this paper focuses analysis on the opportunities and threats of PE investment onInternet industry with the current economic environment, capital market revolution andgovernment policy. On one hand, the production of "Provisional Regulations for thesupervision of PE Investments," standardize the PE industry. Governmental support for PEand increasing the insurance funds would raise capital sources. The Internet industrytransition provides greater investment for PE. The switch from Three-New-Board market toGEM market would shorten the listing period. The policy which Non-profitable Internetcompanies can be listed for one year on Three-New-Board market reduces the listingthreshold. And the upcoming IPO registration system will enrich the exit of PE investors. Onthe other hand, the complexity of investment environment, Lack of management afterinvestment, Restrictions on foreign investment and the tax burden are main threats for PE.Last but not least, for the above analysis, this paper proposes some advices for PEinvestment on Internet industry in terms of fundraising, investment, post-investmentmanagement, and exit.