Study On China's "Listed Company+PE" Buyout Funds

Mergers and acquisitions play important roles in the capital market. M&A activities can promote the flow of capital, improve the efficiency of resource allocation. M&A can also act as boosters that help companies carry out the integration of resources and achieve leapfrog development.In recent years, China's domestic M&A market has experienced rapid development. From 2005 to 2015, the number of domestic M&A transactions (both the acquirer and the acquiree are domestic entities) occur in a year has increased from less than 1,000 to nearly 6,000. And the total amount of such transactions has increased from a bit more than 700 billion yuan to about 2.5 trillion yuan during the same period. Both the number and amount will remain a rapid growth momentum in the foreseeable future.Listed companies are important participants in the M&A market. In 2015; Chinese domestic listed companies(i.e. A-share companies), as acquirer, carried out about 2,600 M&A transactions, and the total amount of these transactions came up to nearly 1.5 trillion yuan, which accounted for about 45% an 60% of the total number and amount of domestic M&A transactions occurred in that year.The rapid development of China's domestic M&A market catalyzed a number of professional private equity investment management institutions which are specialized in M&A transactions. These institutions, cooperate with listed companies, together establish M&A funds through which they can carry out M&A transactions with more efficiency. This kind of funds are so called "Listed company+PE" buyout funds.This article researches the "Listed Company+PE" buyout funds from two aspects:general analysis and case study.In the general analysis section, this article studies 214 cases occurred from 2012 to January 31st,2016, and induced the basic forms of "Listed company+PE" buyout funds' organizational structure, financing model, operational management, exit approach, etc. and then analyzes the advantages and disadvantages of each form.In the case study section, this article takes the "Tiantang Dakang" buyout fund as the object of study. This fund is established jointly by Zhejiang Silicon Paradise Asset Management Group and Hunan Dakang Pasture Farming Co., Ltd., and is the first "Listed company+PE" buyout fund ever established. This article uses the research framework and results of the general analysis section and studies the operational model of Tiantang Dakang fund. Through the study of this case, this article points out that the "Listed Company+PE" mode contains two core contradictions. The first contradiction is the conflict between the performance of post-investment management and the acquiring cost of the listed company. The second contradiction is the conflict between the listed company's deep participation in the fund's management and the diversity of the fund's exit approaches.Combined with the conclusions of general analysis and case study, this article gives some suggestions concerning the development of the "Listed Company+ PE" mode and its supervision.