International private equity investment funds on the market development trend and China's path selection

In recent years, private equity funds (PE rapid development of the international financial markets a hot topic, become the bank credit and capital market financing after the third-largest market players, while China's rapid development of private equity Investment fund, has become the world the most dynamic, emerging markets PE, but need to recognize that China's current PE is also a lack of effective supervision, PE of development there are still many problems in the private equity fund Investment and financing the rapid expansion of the scale, showing risk Kaishi when, how and international experience in the development of the actual situation of China's PE to develop ideas for the development and regulatory policy, which for the promotion of long-term development of China's PE has very important significance.

First, the international private equity Investment fund current development and regulatory reform

United States, Britain and France, a major private equity fund private placement to raise way, the issue object to qualified institutional investors in recent years, private equity funds in Europe and America showed the increasing diversification of sources of funding trends, including pension, endowment funds, insurance companies, commercial banks, high net worth individuals or family company, etc. The key is to require investors with a strong ability to identify risk and risk tolerance. the organization of private equity funds, are: corporate, private equity, private contractual (Trust-type private, limited partnership private equity now, limited partnership is a major U.S. private equity fund form of organization. the international regulation of private equity funds in the following four aspects: First, the regulation of funds, mainly in the release of funds, fund investors and the number of qualified supervision. Second, the regulation of fund managers, mainly in the regulatory requirements managers should have certain qualifications, and must be reported to the relevant financial regulatory authorities in the registration and regular inspection. Third, the Fund invested enterprises supervision. fund managers must report regularly to the regulatory authorities of its major Investment markets and instruments, performance data and other information and risk concentration. Fourth, the regulation for investors, mainly institutional investors For insurance companies and commercial banks and other institutional investors, regulators require strict proportion to the Investment restrictions in order to prevent risks, and make a reasonable asset-liability management.

2008 subprime crisis triggered by the financial turmoil sweeping the globe, but also to the global private equity industry into the most difficult moment in history of global private equity transactions, Investment income and return on Investment has dropped sharply. Subprime crisis on private equity Investment fund industry impact in the following aspects: First, part of the transaction failures, had to withdraw or re-determine. The second is to create a fund to promote acquisition of other new types of Investment to configure their huge Investment funds, these investments include private equity investments listed companies (PIPE), has been on the leveraged buyout acquisition of bonds, etc. The third is part of the Large private equity funds and their management company losses began to appear since the subprime mortgage crisis, private equity investment fund industry has been greatly affected, loss of part of the fund began to appear because of Wall Street investment banks are the most important round of crisis The victim, therefore, including Goldman Sachs, Morgan Stanley, Merrill Lynch and other large private equity fund management institutions in the crisis in the worst affected.

2008 financial crisis, governments generally recognize that private equity funds, including private equity investment fund regulation implied a lack of significant risks, including the United States and Europe on private equity funds and private equity fund managers to strengthen the regulatory trends showing Obama Administration approved in June 2010 since the Great Depression the most subversive of the financial regulatory reform bill bill provides $ 100 million in assets under management of investment advisers must be registered with the SEC, and ask the SEC to provide trading and portfolio For information, to assist regulatory agencies need to assess risks to the system. SEC will be the investment adviser for regular and special inspections. The bill limits banks to engage in swap transactions, including business, limiting investment banks and hedge funds, private equity firms and other harsh measures. The passage of the bill affecting the sources of private equity funds of funds "diversified" to a certain extent, affect the development of private equity funds the British venture capital Association proposed for the UK private equity industry as a whole regulatory guidelines - "British private equity investment information disclosure and transparency guidelines>> for private equity funds information disclosure guidelines, and information disclosure and the disclosure of the main content of a clearly defined. guidelines, the private equity venture capital fund should report regularly to the UK Association (BVCA) designated agencies to provide data to facilitate private equity investment activities of economic impact there is evidence of rigorous follow-up analysis, and timely monitoring of financial risks the European Parliament in November 2010 formally adopted the EU hedge fund regulation bill This is the first direct EU regulation of hedge funds and private equity industry regulations, the contents of the most prominent one is the introduction of a "European passport" mechanism, but it may be the emerging economy's financial markets and hedge non-EU countries Fund impact, coupled with the differences between Europe and America, the future may cast a shadow over the global financial regulatory reform.

However, as the Chinese economy in this financial crisis was the most prominent, since most of China is to develop private equity industry, therefore, more and more foreign private equity investment funds began to focus on the business of the Chinese market . many well-known private equity investment funds raise RMB funds in the country is the best evidence, for example, Since 2010, Blackstone, First Eastern, CLSA, Carlyle, TPG and other foreign institutions have set up in China PE RMB fund, Bain Capital, UBS, KKR and other institutions are also planning to issue RMB funds in the country. In recent years China's economy continued to grow steadily, the expected appreciation of the yuan, investment and exit channels continue to broaden gave international capital can be expected to bring a high return on investment.

Second, China's development status of private equity investment fund

In recent years, China's rapid development of private equity investment fund, in 2005, the Commission proposed a listed company's share reform program, with the split share reform, the gradual completion of the work, began to enter China's capital market to the "tradable" stage, and thus opened the prelude to a new bull market in this stage, the relevant state departments in order to promote the development of venture capital, issued a series of Laws and regulations, which marked China's venture capital into the government under the guidance of stage of rapid development, while, during this period, private equity funds are beginning to enter the stage of rapid development, local fund management company has expanded rapidly. The reason are: (1 input of excess global liquidity and the Chinese economy itself internal imbalance makes the problem of excess liquidity in China intensified due to profit-driven capital, excess funds began to penetrate into all areas of income exist, (2 long-term growth of China's economy, all walks of life filled with numerous investment opportunities ( 3 The Government has introduced various policies to support China's private equity investment funds, such as, for <<>>,<< Law Trust Law, Securities Law >>,<<>> "Partnership Enterprise Law>> other changes to the law and the introduction of China's private equity investment fund for the development of a sound legal basis for the .09, the State Council transmitted the NDRC and the Ministry of Commerce jointly issued guidance on equity investment funds, local governments have come up around the financial resources to venture capital Fund and the development of preferential policies to promote local private equity investment funds, led the parties to actively participate in industry funds in the fund-raising, the government also introduced in 2010 to release the equity investment of insurance funds, some of policy, local governments in order to attract equity investment institutions located in the registration, taxes, etc. to give great incentives the State Council promulgated to encourage and guide private investment in the new 36, as well as the use of foreign investment in a number of observations, this series of policy The introduction of actively promoting the development of equity investment funds (4 launch of the GEM for our private equity funds provide a good exit mechanism, thereby contributing to China's domestic private equity funds to develop normally.

After several years of rapid development, China's current private equity fund's overall size and growth rate are among the first in Asia. Since 2003, China's private equity fund market has maintained a 40% compound annual growth rate has far exceeded the United States, Japan and other countries.

2010 and can be regarded as private equity fund in China during a landmark year in 2008, experienced a financial tsunami, the 2009 fund-raising, investment downturn after 2010, China's private equity investment fund ushered in a strong rebound in the market, according to Qing dynasties Research Center released data show that in 2010 China private equity fund market fund-raising, investment, exit number of cases are historical highs. Specifically, the fund-raising, the year a total of 82 to invest in mainland China private equity fund raising completed, raising the amount of $ 27.621 billion, investment, total investment in the year 363 cases, the transaction total $ 10.381 billion, out of, the year a total of 167 cases occurred out of pen One way out of 160 pen IPO, equity transfer out of 5 pens, M & A exit 2 pens, breaking the 2007 record of 95 pens was the highest recorded.

III. The main problem facing the

At present, private equity funds still exist some problems, mainly in the following areas:

First, the relevant laws and regulations are not perfect, the lack of a unified government departments. Our country has not yet introduced specifically for private equity investment fund laws and regulations, the regulatory authorities is "fragmented", the lack of a unified government departments. With practice development of "private" lack of basic norms may lead to adverse effects will gradually appear now departments have drafted <<Equity Investment Fund Management (draft>> has been submitted to the State Department, is awaiting approval. management approach clearly appropriate for the PE industry regulatory policy and the basic regulatory framework point, if this management approach is approved, the approval of the PE industry, a modest regulatory model, which does not advocate a strict examination and approval system, but would be qualified fund managers, qualified institutions Investors set entry requirements, including funding for individual investors to raise capital requirements and overall size requirements, and the investment behavior of some of the specifications and believe the introduction of this approach will help build a legal framework for private equity investment fund in China the development of a positive, far-reaching impact.

Second, market-oriented to be improved. China's private equity investment funds based mainly on the Government to promote, market-oriented needs to be strengthened, while many enterprises and local government are inextricably linked, and how better to deal with local local government relations, and has become the development of private equity investment fund yet another challenge.

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Third, the lack of a comprehensive fund management institutions from historical results, internal control, processes, personnel quality, brand and other terms, the majority of fund managers currently lack sufficient market experience, which is the banking, insurance, state-owned enterprises and other institutional investors those who pay close attention to the problem.

Fourth, the lack of credit management mechanism is to develop a good credit system based private equity investment funds, such a credit system in the United States has been very mature in our market has not formed a "credit", "honesty" as the basis of the operating mechanism , the state has no relevant credit management system and disciplinary mechanisms, particularly fund managers is difficult to avoid due to "moral hazard", plus country not related to personal bankruptcy system, so administrators jointly and severally liable can not really performance, which undoubtedly increased the fund's investment costs and investment risks, but also hinder the development of equity investment funds, an important factor.

In summary, our private equity investment funds have entered the market under the guidance of the government to promote the development period, in addition to the development of venture capital funds for necessary government funding for risk compensation by the Government to establish mechanisms to monitor access, the Other types of private equity funds can be gradually implemented in the form of industry self-regulation model-based management in private equity investment fund legislation is necessary to "open the door legislation" mode principle, to maximize the market for private capital allocation, while Association for the fund industry's self-management to leave space in order to self-fund industry association-based case management, administrative supervision to the government to monitor the degree of involvement should not interfere with or affect private equity fund management as a principle of the normal .

IV. Private equity investment fund development goals and ideas

From the development objective point of view, should adhere to the "government guidance, industry-oriented, market, effective monitoring, management practices," the principle around the promotion of economic growth and industrial structure optimization, positive development of equity investment funds and equity investment management company, to build a multi-level equity investment fund system, and continuously optimize the investment and financing structures, including the investment structure to speed up the economic structure, industrial structure and the strategic adjustment of product structure, enhance the overall strength of the financial sector and to promote steady economic development.

The future development of ideas from the point of view, the need to expand from the following aspects:

First, the regulatory environment. As soon as possible need to establish relevant management practices and regulatory framework to ensure that the funds have the basic requirements for equity financing, investment and financing capacity of present policies introduced by the various departments lack of harmonization constrains the development of PE, so the need for existing law "Law >>,<< >>,<< Partnership Enterprise Law Trust Law, Securities Law >>,<<>> and the related foreign investment, domestic mergers and acquisitions, overseas market, foreign investment regulations to be integrated and amend the same time, should gradually establish and improve risk control mechanisms, including the establishment of decision-making system, standard operating procedures, develop contingency plans, operational risk and risk management, a clear investment ratio, exit mechanisms, information disclosure and other matters requiring regulatory agencies can capacity assessment, to strengthen supervision of investment operations, to prevent systemic risk.

The second is the development environment from the financial regulatory environment, monetary policy environment, financial credit environment, financial intermediation services environment, environment, financial liberalization, financial security and environmental aspects continuous improvement of the equity funds provide a good development.

Third, the establishment of secondary market liquidity data show that three quarters of 2010, domestic private equity funds to raise a total of $ 21.2 billion, exceeding the year 2009 fund-raising total. A market booming, making the market demand for more and more urgent liquidity Recently, Beijing financial asset transactions for the first time issued "Beijing private equity transactions of financial assets Exchange rules>>, marking China's first private equity fund secondary market trading platform test run the new set up private equity trading platform, private equity investments in the areas of venture capital companies, funding agencies to provide fund raising, project financing, equity transfer, the transfer of fund shares, out of a full range of investment services private equity fund secondary markets in Europe and America have With twenty years of history, formed a relatively complete market system. financial assets need a market to raise capital, the secondary market to create liquidity. electronic equity fund secondary market trading platform will be the future of international capital markets trends.

Fourth, the exit mechanism in the Government needs to support multi-level, diversified investment and financing system, provide a variety of exit channels and mechanisms to spread the risk of equity investment and development. Exit of private equity funds, usually the stock market, equity market and M & A markets, establish and improve the qualified investors outside the market, and trading platforms such as the transfer of equity block trading market, including the China Beijing Equity Exchange, Tianjin Property Rights Exchange, and New Market, etc. to support and encourage various types of venture capital and equity institutional development, gradually raising, investment and exit and other featured development environment for equity investment.

Fifth, the establishment of intermediary service system, support for venture capital and SME development. The future needs of a number of PE firms, information services for the SME financing institutions and intermediaries, to promote the financing system was established.

Sixth, to attract qualified institutional investors, strengthen financial institutions and other financial instruments of integration, speed up the construction of multi-level capital market, such as the introduction of appropriate complementary measures to implement the Partnership Enterprise Law, limited partnership fund to support the establishment of financial institutions including commercial release banks, insurance companies, pension funds and other private equity investment policy restrictions. to encourage commercial banks to develop PE custody business, lending and trust mergers legitimate investment in the equity investment fund to encourage securities companies, insurance companies, trust companies, finance companies, etc. to invest or set up direct equity investment funds and investment companies support the enterprise annuity, social security funds legally registered in accordance with the relevant provisions of the equity investment funds. In addition to private capital as the background of PE with a foreign background and context of state-owned capital of China's integration team PE future development trends.

Seventh, the introduction of incentives, training funds management institutions. How to cultivate high-quality, standardized fund management institutions, which in itself is protection of the Fund's investments, but also reduce the risk of the industry to protect the interests of all parties, based on the long-term development of China's PE far-reaching.

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