Research On Risk Identification Of Investment Decision Of Industrial Investment Fund Project

Industry investment fund is a special investment fund,which originates from foreign venture capital fund or private equity investment fund,after coming to China,due to the immaturity of qualification,credit and management of most private enterprises,they cannot copy this model to gain the investment,so it evolves into industry investment fund.As the development of the age,the application of financial tools is getting increasingly mature,and the demand of development fund of various enterprises are growing,along with big pression from domestic economic situation in current years,pressure of traditional capital allocation is increasing correspondingly,industry investment fund plays a great role of leverage,the application scope of it has turned from a financial tool of investing several industries(mostly are related to people's livelihood or are state-owned)into improving many enterprises with wealthy strength.Compared to the traditional debt financing,industry investment fund has distinct superiority: on one hand,its time limit is generally 3-7 years,which can decrease the short-term debt service pressure of enterprises to a great extent,effectively solving the problem of shortage of capital;on the other hand,industry investment fund is off balance sheet financing,which can reduce the asset-liability ratio of enterprises.Although industry investment fund can provide stable cash flow,which can supplement the weakness of debt financing,solve the financing dilemma,but industry investment fund starts with venture investment,with the characteristic of high risk and high potential income in it,so the projects/enterprises are invested should be comprehensively analyzed from market,law and other aspects,so that the capital can be effectively harnessed.Industry investment fund falls into investment decision stage,investment and post-investment management,and fund exit,among them,the decision and the risk control in the investment decision stage will directly affects the profit and future development of industry investment fund.The main work of investment decision stage is to screen investment projects/enterprises firstly,thenfurther conduct due inspection and prospect analysis to the invested projects/enterprises,proving reference for decision-making.There are characteristics of importance and complexity,all kinds of nonnegligible risks are contained,so resultful risk control is the key of this stage,even the entire fund operation course.While the primary part of risk control is risk identification,only identify the current deficiency and possible factors that affect operation,can proceed the following risk assessment,and make an investment decision,therefore,in the investment decision stage,risk identification is especially important,which is the important precondition of a series of operations after industry investment fund.But risk has the characteristics of hide,complexity,and constantly changing with different industries at different stage,we need to have a set of efficient,logic screening method that can be applied widely when facing numerous and complicated information of enterprises of different industries at different developmental stage and different enterprise environment,so that we can quickly grasp the operation and risk situation of invested projects,identify the hidden risks,laying foundation for the later risk control,effective capital input.The paper classifies and analyzes the critical risks that encountered in the investment decision stage,firstly,the risks facing in the phase can be divided into financial and non-financial,among which,financial risk is the risk related to the finance: the authentic financial situation,implicit debts of the invested enterprises that cannot be mastered in the due investigation will result in wrong decision-making.Non-financial risks are mainly market risk,legal risk and other risks that affect sustained profitability: the market risk is the effect that indirectly have on the enterprise through competitor,supplier or consumer in this industry;legal risk is mainly include contract risk,operational compliance risk,qualified asset compliance risk,etc.;Other risks and fund that impact sustained profitability values more on future development,whether can continue to make profit is the key consideration direction to determine whether invest capital,this kind of risk is mainly influence the hiding risks of future sustained profitability.After classified study and analysis of various risks,build a risk identification model for different types of risk,The potential risks at this stage can be effectively identified byanalyzing each indicator of identification model one by one.eventually you can lay foundation for risk control of investment decision at earlier stage,providing reference for investment decision-making.Finally,industry investment fund case of X public transport company is introduced,risk identification model is harnessed to conduct pre-phase analysis of its practical operation situation and potential risks,verify the effectiveness,practicability and operability of risk identification indicator model.This paper aims to provide a set of practical reference identification model that can apply to most enterprises as much as possible for industry investment fund decision stage,provide comprehensive analysis and risk identification in advance for the questions need to be considered after industry investment fund,so it can provide relevant reference data and other materials for investment decision-making.