Study On The Influences Of Government Guide Funds To Private Equity Funds

Recently,China's economy has developed into a new term called 'The New Normal',in which Supply-side Reform has been highlighted so much.Industrial Structure Upgrading which needs huge amount of capital to support and relates tightly to the development of Private Equity Fund Industry is also very important in this time.However,regarding to the Information Asymmetry and Positive Externalities,the resource allocation can not be done well only by market itself and many young companies with high and new technology could not get enough money to develop.So,it will make sense if Government Guide Funds engaged in the growth of Private Equity Fund Industry.Governments can intervene in the Private Equity Fund Industry through the Government Guide Funds by gathering private capital,spreading investment risk,conferring investment advantages,leading investment direction and so on.Also,leverage effect and signaling effect may be the two main effects private equity funds being influenced by the Guide Funds and through these two,the Guide Funds can collect enough money and invest them to the emerging industry to help the Industrial Structure Upgrading to be finished.To better analyze the effects of government guide funds,we have done an empirical analysis using the data of government guide funds and private equity funds from 2010 to 2018.For leverage effect,we use the Cox regression model(proportional hazards model)and multivariable linear regression model to analyze and find that with the involving of Guide Funds,the time can be shorted for private equity funds to raise capital.When it comes to the signaling effect,using the difference-in-difference model,we can figure out that the government guide funds have significant signaling effect on private equity funds.At last,combining the effects of Government Guide Funds and the experiences of domestic and international excellent Guide Funds,we made several suggestions as following:First,improving resource allocation among existing government guide funds;Second,establishing a more thorough interest allocation mechanism and do pay attention to the training of talents;Third,relaxing the restriction of the investment territorial scope as well as emphasize the importance of industry efficiency;Last,setting up an applicable performance evaluation mechanism for the Guide Funds to help the Private Equity Fund Industry develop better.