Research On Motivation,Performance And Risk Of Buyout Investment Of Private Equity Institutions In China

The traditional operation model of PE institutions is to conduct non-public raising funds from specific investors,select non-public companies to make equity investment,and promote their appreciation through post-investment management.Finally,it can realize the withdrawal and gain benefits through IPO,merger and acquisition,repurchase,etc.Generally speaking,PE institutions most often use the equity investment mode is participate,and the IPO of the enterprise is the most important exit mode.But as a result of PE institutions participate investment;the control of the company is at a disadvantage.The IPO process relies on the promotion of large shareholders,and withdrawal quickly after the IPO.This traditional model relies too much on the big shareholders' decisions,and the PE organization lacks initiative in the IPO process,and the failure to realize the IPO will lead to the increase of investment risk of PE institutions.In 2017 PE institutions buyout investment constantly emerging,from Citic group and Citic capital controlled McDonald's to Hill House capital teamed up with CDH controlling and privatization belle,China's equity investment institutions buyout investment has caused the attention of the capital market,shows that our China's PE institutions conducted on investment model and investment philosophy is a new exploration.This paper choose the China's PE institutions buyout investment case-GTJA Controlling Boya Biotechnology Company,aiming to explore the advantages and disadvantages of the buyout investment versus the participate investment.The research finds that the PE institutions take the buyout investment model,and they can take the initiative in corporate governance,and effectively accelerate the IPO process,and the high proportion of the shares controlling and the bonds of interest can incentivize the PE organizations to actively participate in the governance and management of the enterprises,to merger and acquisition,to increase the performance of the enterprise and to promote the value of the enterprise,so that PE institutions can gain wider economic benefits.Therefore,the buyout investment mode of PE institutions will become another important PE investment mode and profit path in China's specific capital environment in the future.