Private equity investment projects

Private equity investment (PE) refers to equity investment in unlisted companies through private equity funds. In the process of transaction implementation, PE will consider the future exit mechanism, that is, through the company's initial public offering (IPO), mergers and acquisitions (M & amp； A) or MBO, etc Simply put, PE investment means that PE investors look for excellent and high-growth unlisted companies, inject capital into them, obtain a certain proportion of their shares, promote the development and listing of the company, and then make profits through the transfer of equity.

Characteristic description of private equity investment;

1. In terms of fundraising methods, it is mainly raised by private placement for a few institutional investors or high-net-worth individuals, and its sales and redemption are carried out by fund managers through private consultations with investors. In addition, the investment method is also carried out in the form of private placement, which rarely involves the operation of the open market and generally does not need to disclose the details of the transaction.

2. More equity investment is adopted, and debt investment is rarely involved. Therefore, PE investment institutions enjoy certain voting rights in the decision-making management of the invested enterprises. Reflected in investment instruments, common stock or transferable preferred stock and convertible bonds are commonly used.

3. Generally investing in private companies, that is, unlisted companies, and rarely investing in publicly issued companies, will not involve the obligation of tender offer.

4. It is more inclined to a molding enterprise that has formed a certain scale and generated stable cash flow, which is obviously different from VC.

5. The investment period is long, generally reaching 3 to 5 years or longer, which belongs to medium and long-term investment.

6. The liquidity is poor, and there is no ready-made market for the transferor of a non-listed company to directly reach a deal with the buyer.

7. There are many sources of funds, such as high-net-worth individuals, venture funds, leveraged M&A funds, strategic investors, pension funds and insurance companies.

8.PE investment institutions mostly adopt limited partnership system, which has good investment management efficiency and avoids the disadvantages of repeated taxation.

9. Diversification of investment exit channels, including IPO, transaction sale and merger (M & amp； A), the target company management repurchase, etc.