Research Of The IPO Exit Return Of Private Equity Investment In Domestic Market And Its Determinants

With the development of capital market in China, the small and medium-sized plate market established in 2004 and the growth enterprise market established in 2009. These all paved the roads for small and medium enterprises of financing. In fact, the emergence of private equity investment is mainly in order to solve the problem of small and medium-sized enterprise financing. Therefore, the increasingly loose system of listed has brought more broad exit road to private equity investment. In 2015, the state is expected to carry out the stock registration system which will decrease the listed threshold of the companies. Thus, the probability of IPO exit of private equity investment will be greatly increased. Of course, the return level will rise significantly. Therefore, this article only focuses on the research of one way exit of private equity investment which can lay the foundation for later scholars studying.In this paper, the research of the IPO exit return of private equity investment and its determinants can play a role to guide and predict variety of capital markets. First of all, from the perspective of private equity investment institutions, in China’s growing environment for the development of the mature capital market, high multiples has attracted more and more private equity investment institutions expecting to realize their own interests by way of the IPO exit; This article through the study of a large number of literature at home and abroad and also combined with the actual situation of our country, which uses a large amount of data regression analysis in order to provide a good investment guide for private ecaaty investment institutions through the results. And also these results can guide private equity investment institutions in the selection of the optimal investment scale and direction in order to obtain greater returns. Secondly, from the perspective of investors, as most private equity funds are in the mode of operation of closed and they do not need to be disclosed investment information to the outside world. This makes most investors can not really understand how much return the private equity investments can bring. Of course, the influential factors of the return on investment are poorly understood. Therefore, for private equity investment, a research of IPO exit return for investors can provide a new perspective for the investors in choosing investment mode and help the investor to gain more returns. Finally, from the point of the view of the small business, the initiation of private equity is designed to solve the problem of small and medium-sized enterprise financing difficulties. Therefore, the prosperity of private equity has brought an opportunity for small and medium-sized enterprise development. The study of private equity’s yields for small and medium-sized enterprise financing is of great significance.In addition, this paper uses the methods of comparative study, descriptive statistics and econometric analysis to analyze the exit return in domestic market of private-equity investments and study the influencing factors from the empirical analysis. In the end, the paper will get the corresponding conclusions. By using the aid of our country securities market in Shanghai stock exchange, Shenzhen stock exchange, the gem and the small and medium-sized enterprise board listed companies, this paper obtains a relevant data of listed companies and uses this data to get the private equity investment background analysis. Then study the IPO exit returns of private equity in China through the investment mode, the invested enterprise features, PE institution itself and the characteristics of market environment and so on. Finally the paper discusses the various factors influencing the exit returns.The selected data scope of this paper is bigger, so this paper:carrcarry on the regression analysis by the larger samples, which is one of the innovation of this article points. Since the growth of enterprise market launch in October 2009, China’s private equity investment is increasingly active. Therefore, in this paper, through selecting the data of 1012 listed companies from Shanghai stock exchange, Shenzhen stock exchange, the gem and the small and medium-sized enterprise board listed companies from 2009 to 2014. In the top ten shareholders of the sifting PE/VC background of listed companies in the top ten shareholders of the sifting PE/VC background of listed companies, this paper choose 298 companies. These companies have already invested 460 times during the period of the total investment of 1012 companies listed. In addition, eliminating lock-up periods range of private equity investment, there are still 409 investments. The sample range has not been studied by scholars, so based on the sample range, the empirical research of this paper is more reliable. This can reflect the China’s IPO exit return in private equity investment accurately. In addition, this article research assumption breaks through the existing research variables, which joined the market environment of study factors. For example, the difference between main board and gem and the small and medium-sized board listed, economic cycle, etc. This will be more comprehensive to add the influence factors into this study, which will increase the scientific nature of the research. Finally, the development of private equity investment is in full swing, and as a result of private equity investment institutions information is not public. Therefore, there are less domestic literature and the main researches are just involving aspects about exit mechanism of private equity and exit ways. So the study of returns is very less. In short, this paper based on one way to exit and study of IPO exit returns. This is so important for the future development of private equity investment institutions and small and medium-sized enterprise. However, this paper also has some shortcomings which are worth being deep study for later scholars. First of all, based on the former top ten shareholders of listed companies in private equity firms with PE/VC background for research (a total of 307 private institutions) is not comprehensive for study because the private equity firms are more than 1000 at present. Therefore, the study failed to cover all of the PE and is imperfect on the study of private equity investment institutions. Second, when studying the rate of return, using the lock-up periods closing price as the private equity firms exit price is possible existing some deviation. And research level is the rate of return on the IPO exit return, so this paper failed to fully display all of its aspects.