A Research On The Valuation Of Private Equity Investment Fund In China Based On Waterfall Structure

In 1986,China's first private equity investment institution was born.After more than 30 years of development,private equity institutions have grown from a few to more than 10,000.The investment in private equity also drives the booming of the real economy,solves the financing problem of the entity,and brings a lot of benefits to most investors.As one of the important investment methods in the capital market,research on private equity investment is also increasing.Traditionally,the private equity fund's income is more than the market's average rate of return,but the value and source of private equity funds,market participants are not deeply aware.Since private equity investment has a short development time in China,it is particularly important to evaluate the value of investors in order to ensure the returns of investors.Therefore,this paper attempts to analyze the value composition of private equity funds and evaluate them on this basis.The article first expounds the traditional value evaluation methods,classifies them according to whether the cash flow discounting principle is embodied,and elaborates various methods and analyzes their applicability.The valuation model of the private equity fund based on the economic model of the rating is selected to analyze its advantages and disadvantages,and to provide guidance and suggestions for the new valuation model of this paper.Secondly,according to the distribution of cash flow of private equity funds,the theory of "waterfall structure" is proposed,which divides the cash flow into four stages,and evaluates the income of creditors,general partners and limited partners at each stage.Effectively grasp the characteristics of private equity funds.At the same time,based on the combing and generalization of the previous literature,it is concluded that the value of the private equity fund is mainly determined by two parts,namely the asset part and the liability part.The part of the assets mainly comes from the income from the initial investment project of the limited partner and the future income that has not been invested in the commitment.This is also the focus of the value assessment;on the liability part,it mainly comes from the debtor's income requirements and the fund management costs.Secondly,the paper puts forward the value evaluation model used in this paper,adjusts the index of the evaluation of the performance of the private equity fund,the open market equivalent(PME)as the value-added coefficient of the uninvested commitment,and points out that it is related to the internal rate of return,the scale of investment,and the investment experience of private equity institutions.Sex.The results show that this part of the value is directly proportional to the internal rate of return of the project and the investment experience of the private equity institution.Finally,based on the empirical results,the article is summarized,and the shortcomings and research prospects of the model are proposed.