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Private equity investment (PE) refers to the equity investment in non-listed companies through private equity funds.During the execution of the transaction, PE will take into account the future exit mechanism, i.e. through initial public offering (IPO), merger and acquisition (M&A) or management buyback (MBO) etc.To withdraw from profit in these ways.In a nutshell, PE investment means PE investors looking for outstanding high-growth unlisted companies, injecting capital into them, obtaining a certain proportion of their shares, promoting the company's development and listing, and then making profits through the transfer of shares. Broad sense The broad PE is the equity investment covering the various stages before the initial public offering, That is the investment in enterprises in the seed period, the initial stage, the development period, the expansion period, the maturity period and the Pre-IPO period.The relevant capital can be divided according to the investment stage: Venture Capital, development capital, buyout/buyin fund, Mezzanine Capital, turnaround, Pre-IPO capital (such as bridge finance),And other such as private equity after the listing of (private investment in public equity, that is, PIPE), non-performing debt (distressed debt) and real estate investment (real estate), and so on.In the Chinese context, private equity investment is divided into private equity investment that is directly invested in target companies in China and red chip private equity investment through the establishment of offshore companies overseas. Narrow sense The narrowly defined PE mainly refers to the private equity investment part of mature enterprises that have formed a certain scale and generate stable cash flow.Mainly refers to the private equity investment part in the later stage of venture capital investment, of which M & A funds and mezzanine capital account for the largest part of the capital scale.In China, PE mainly refers to this kind of investment. The operation of private equity investment refers to the whole operation process of the establishment and management of the fund, project selection, investment cooperation and project withdrawal by the private equity investment institution.Each investment institution has its own unique operation mode and characteristics. Its operation is usually low-key and mysterious. To some extent, the different operation modes of private equity investment directly affect the level of return on investment, which is an exclusive secret that can not be leaked.Although we may not be able to know many details of the specific investment operations of various investment institutions, usually private equity investments have some common basic processes and basic methods. Main participants The main market players involved in the operation chain of private equity investment mainly include invested enterprises, fund and fund management companies, fund investors and intermediary service agencies. 1．investee corporation The investee company have an important characteristic -- they need capital and strategic investors.Enterprises need funds of different sizes and purposes at different stages of development: Enterprises in the start-up period need start-up capital; Growing enterprises need to raise the necessary funds for scale expansion and production capacity improvement; Enterprises in reform and recombination need to inject funds into mergers and acquisitions and restructuring .Enterprises facing financial crisis need corresponding working capital to tide over the difficulties; Relatively mature enterprises need certain capital injection before listing to meet the corresponding requirements of the securities trading market; Even enterprises that have already listed may still carry out various forms of refinancing according to their needs. 2．Fund management company Private equity investment needs to take the form of a fund as the carrier of funds. Usually, the fund management company will set up different funds to raise funds and then give them to different managers for investment and operation.Fund managers and administrants are the main components of fund management companies，They are usually professionals with rich experience in industry investment, specializing in certain specific industries and enterprises in specific stages of development.After their investigation and research,they invested the fund in the equity of some enterprises with keen eyes in order to withdraw and obtain capital gains in the future. 3．Investors in private equity funds Only investors with private equity investment funds can successfully raise funds to set up funds.Investors are mainly institutional investors, but also a small number of wealthy individuals, usually with higher investor thresholds.In the United States, public pension funds and corporate pension funds are the largest investors in private equity investment funds, and their investment accounts for 30% to 40% of the total fund amount.Institutional investors usually promise a certain amount of investment to fund management companies, but the funds are not in place once, but in batches. 4．Intermediary service institution With the development and maturity of private equity investment funds, various intermediary service organizations have grown and grown.These include： （1)Professional consultants,Professional consulting firms seek private equity opportunities for investors in private equity funds.Professional consultants have won the trust of customers for their outstanding insight in business operation, technology, environment, management, strategy and business. （2） Financing agents ， financing agents manage the entire financing process. Although many investment banks provide the same services, most agents operate independently. （3）Marketing Management, public relations, data and research institutions. In Marketing management and public affairs, some groups or experts provide support to private equity fund management companies.while the increasing complexity of marketing management and social strategies constitutes a huge demand for data and research by private equity fund management companies. （4）Human Resources Consultant. With the development of private equity investment industry, its demand for human resources services is increasing. The work of these agencies are to recruit members of the management team of the invested enterprise or fund managers of fund management companies. （5）In addition to corporate listings and the sale of equity-related services ，stock brokerage companies also provide financing services for private equity investment funds. （6）Other professional service organizations, private equity investment fund management companies also need agents and consultants in property or real estate, fund custodians, information technology service providers, professional training institutions, pension and insurance actuarial consultants, risk consultants,Taxation and audit firms etc other professional institutions.The role of intermediary service agencies in the private equity investment market is becoming more and more important， They help private equity funds raise funds, connect companies and funds in need of funds,and evaluate the performance of private equity funds for investors . The existence of intermediary service agencies has reduced the information cost of private equity investment funds. |