Study The Operation Mode Of Environmental Protection Industry Fund In Chongqing

At present,China's environmental protection industry is in a period of rapid development.As a high-tech industry,environmental protection requires large capitals and long circle of funds,and mainly relying on financial subsidies and bank loans.Under the background of Supply-side Reform and One Belt One Road initiative,which emphasize to support the development of environmental industry,the environmental protection industry fund emerges.It becomes a new approach to the financing of the environmental protection industry,and help us analysis the combination of environmental protection fund and market-oriented funds.Although Chongqing is located in the western region where the environmental protection industry is relatively underdeveloped,it's special geographical location such as Yangtze River and The Three Gorges.With the support of relevant national and local government policies,the environmental protection industry has developed rapidly in recent years.Because of the higher requirements for financial support,the establishment of the Chongqing Environmental Protection Industry Fund is an attempt to expand a new financing channel.Based on this background,this article analyzes the operating model of the Chongqing environmental protection industry equity investment fund,and aims to provide reference and suggestions for the development of the future environmental industry fund.Firstly,the paper analyzes the development of China's environmental protection industry and its current situation of financing.And then the paper generally analyzes the status and characteristics the environmental protection fund.The study introduces the case of Chongqing Environmental Protection Industry Fund,with its establishment background from the perspective of sponsors and the organization as well as its Umbrella structure,which based on the analysis of its management and exit mechanism.The operating model conducted by Chongqing Environmental Protection Industry Fund proposes a mediate approach between government-dominated and market-oriented funds,and the fund adopts a way of ‘government-led,market-based',which minimizes the difficulty of fundraising in the early stage.On one hand,government guides investment as leverage and attracts private capital.On the other hand,it employs mother-and-child funds to amplify the lever and gets more investment and financing to boost the industry development.Meanwhile,the adoption of “direct investment and sub-fund establishment” market-oriented model contributes to the sustainability of the fund organization.According to the analysis,it is found that the operating model has obvious advantages.Firstly,it can achieve two leverage amplifications through the two-tier structure of the mother-and-child fund,attracting more capital into the environmental protection industry.Secondly,it can decentralize and reduce risks through diverse investment portfolios.Finally,the diversified configuration of the phases makes the entire industry cycle complete and active,and also increases the possibility of successful investment.However,the development of the Chongqing Environmental Protection Industry Fund still has many restrictions,including the dual management fee of the mother-and-child fund,the conflict between policy and profitability,the insufficient professionalism of the management team,as well as the limited exits due to the lack of channel diversification.Finally,based on the analysis,this paper proposes some suggestions.Initially,it is important to diversify latter funds and improve the professionalization of the management team,meanwhile emphasize the introduction and training of talents.In addition,the fund should improve the supervision system to prevent moral hazard.Further,in terms of investment direction,selecting PPP projects could achieve diversified investment and reduce risks,which is also in line with the future development trend.Lastly,it is also necessary to improve the exit mechanism and improve withdrawal efficiency.