A Research On Risk Management Of Domestic Mezzanine Funds

Mezzanine funds which originated in the United States in 1980s,has grown into a mature product category after 30 year's development in financial market in the U.S.China mezzanine funds business started in 2005.After a short period of exploration,it is now in rapid growth stage.Versatile forms of mezzanine funds including global investment mezzanine funds,domestic large mezzanine funds,medium and small scale mezzanine funds are all expanding their business fast in China market.To achieve aggressive growth,many domestic mezzanine fund ignored risk management in the early stages.That results in a number of failure cases which could not even retrieve investment principal.This introduces concerns from National regulatory authority and becomes a serious warning to all the mezzanine funds as well.Now Central Government requires strict control of financial risks which is considered as a policy and have been written into the government work report of the State Council.Therefore,the research of mezzanine funds risk management which was discussed in the paper would echo to the current macro environment.At present the research of mezzanine funds is rare so that this thesis hopes to provide valuable reference for the senior managers of domestic mezzanine funds,and related industry practitioners.Firstly,the thesis elaborates the development status,characteristics and investment forms of mezzanine funds and quantitatively analyses the operation mechanism and operation flow of mezzanine funds,and introduces the content and flow of mezzanine funds risk management.Subsequently,using the Mezzanine Fund A as a real case who launched a "Real debt of equity" mezzanine fund product,the thesis specifically introduces the setting up background,design plan,exit failure,and other aspects of the mezzanine fund product,truthfully reflecting the risk of mezzanine funds in real operation process.Based on the facts,the thesis analyses the risk management problems of Mezzanine Fund A with risk management theory,and designs the risk management improvement plan from four processes--risk identification,risk assessment,risk control and risk avoidance.That is a comprehensive risk management system for Mezzanine Fund A,which can help Mezzanine Fund A improve its risk management proficiency.Finally,the thesis makes suggestions for risk management of mezzanine funds in China,which hopes to make contribution to the risk management proficiency improvement of the mezzanine fund industry in China.