2. Make a statement including the raising, investment, sharing and risk control of funds.
3. There are a group of rich people who support you, and they provide you with funds of the scale you want.
4. There is a research team that closely follows the changes in the market and makes plans.
5. Have a precise and strict system, so that your plan can be really carried out.
6. As private placement is in a gray area, it should be able to solve some unexpected troubles.
Compared with Public Offering of Fund, such as closed-end funds and open-end funds, private equity funds have very distinct characteristics, which make them have incomparable advantages in Public Offering of Fund.
first, private equity funds raise funds in a private way. In the United States, Public Offering of Fund, such as Tong Fund and Pension Fund, generally advertise through the public media to attract customers, while according to the relevant regulations, private equity funds are not allowed to use any media to advertise, and their participants mainly join through the so-called "reliable information on investment" or directly know the fund managers.
Secondly, in terms of fundraising targets, the target of private equity funds is only a few specific investors, and the circle is small but not low. For example, in the United States, hedge funds have very strict regulations on participants: if they participate in the name of individuals, their annual income in the last two years will be at least 2, US dollars; If you participate in the name of the family, the family's income in the past two years is at least 3, US dollars; If you participate in the name of an institution, its net assets are at least 1 million dollars, and there are corresponding restrictions on the number of participants. Therefore, private equity funds have strong investment objectives, which are more like investment service products tailored for middle-class investors.
Third, unlike the strict information disclosure requirements in Public Offering of Fund, the requirements of private equity funds in this respect are much lower, and the government supervision is also relatively loose, so the investment of private equity funds is more concealed, the operation is more flexible, and the chances of obtaining high returns are greater accordingly.
In addition, a notable feature of private equity funds is that fund sponsors and managers must invest their own funds into fund management companies, and the success of fund operation is closely related to their own interests. Judging from the current international practice, fund managers generally hold 3%-5% of the shares of the fund. Once losses occur, the shares owned by the managers will be used to pay the participants first. Therefore, the promoters, managers and funds of private equity funds are as close as lips and teeth, and the interests of honor and disgrace and * * * * are the same body, which also solves the inherent weakness of managers' interests and insufficient incentive mechanism in Public Offering of Fund to some extent.
Public offering means public offering. There are two meanings of publicity: the first is that you can advertise and raise money from all people you know and don't know. The second is that the number of objects raised is relatively large, for example, it is generally defined as more than 2 people.
Private Placement means private offering or private placement. The meaning in private is as follows: First, no advertising. Second, it can only be raised from specific targets. The so-called specific object has two meanings, one is that the other party is rich and has certain risk control ability, and the other is that the other party is a specific industry or a specific category of institutions or people. Third, the number of private placements is generally small, such as less than 2 people.
in China, generally speaking, a Privately Offered Fund refers to an investment fund that raises funds privately (privately) for a few investors and is established and operated.
The characteristics of private equity funds can be seen as follows:
First, private equity funds are a special kind of investment funds, mainly compared with public funds;
second, private equity funds generally only raise funds in "small circles" (only for a specific few investors);
Third, the operation process of private equity funds such as sales and redemption has the characteristics of private consultation and relying on private trust.
Fourth, the investment starting point of private equity funds is usually high, and organizations such as natural persons and legal persons generally require property of a specific scale;
Fifth, private equity funds are generally not allowed to use public media for advertising, that is, they are not allowed to openly attract and attract investors;
Sixthly, fund sponsors and fund managers of private equity funds usually invest with their own funds, thus forming a mechanism of bundling interests, bearing risks and enjoying benefits.
Seventh, the regulatory environment of private equity funds is relatively relaxed, that is, the government usually does not strictly regulate them;
Eighth, the information disclosure requirements of private equity funds are not strict;
Ninth, private equity funds are highly confidential;
Tenth, private equity funds respond quickly and have very flexible and free operation space;
Eleventh, the return on investment of private equity funds is relatively high (that is, the probability of high returns is relatively high);
twelfth, others.
operation mode of private equity fund
There are two main operation modes of private equity fund.
the first one is a guarantee, in which the fund will hand over the guaranteed funds to the investor, and set a corresponding bottom line. If it falls below the bottom line, the operation will be terminated automatically, and the guaranteed funds will not be returned.
second, receiving the account number (that is, the customer only needs to give the account number to the private equity fund). If the account number falls below 1%, the customer can automatically terminate the agreement, and share the part with a profit of more than 1% according to the agreed proportion. This is for familiar customers and large enterprise units.
organizational form of private equity fund
1. Corporate private equity fund has a complete corporate structure and its operation is more formal and standardized. At present, corporate private equity funds (such as "so-and-so investment company") can be established conveniently in China. Semi-open private equity funds can also operate conveniently in a flexible way, and their investment strategies can be more flexible without strict approval and supervision. For example:
(1) Establish an "investment company" whose business scope includes securities investment;
(2) The number of shareholders of the "investment company" should be small, and the capital contribution should be relatively large, which not only ensures the nature of private placement, but also has a large capital scale;
(3) The funds of the "investment company" are managed by the fund manager. According to international practice, the manager collects the fund management fee and benefit incentive fee, and enters the operating cost of the "investment company";
(4) The registered capital of an "investment company" is re-registered once a year at a certain time point, and nominal capital increase and share expansion or capital reduction and share reduction are carried out. If necessary, the investor can redeem its capital contribution once a year at a certain time point, and at other times, investors can transfer their shares by agreement or conduct OTC transactions. The "investment company" is essentially a corporate private equity fund that can be raised at any time, but only redeemed once a year.
However, corporate private equity funds have a disadvantage, that is, there is double taxation. The ways to overcome the shortcomings are:
(1) registering private equity funds in tax havens such as Cayman and Bermuda;
(2) register the corporate private equity fund as a high-tech enterprise (which can enjoy many benefits) and register it in a place with relatively favorable tax;
(3) backdoor, that is, in the establishment and operation of the fund, a company (preferably a non-listed company) that can enjoy tax benefits is jointly acquired and used as a carrier.
2. Contractual
The organizational structure of contractual funds is relatively simple. The specific methods can be as follows:
(1) As the fund manager, the securities company selects a bank as its custodian;
(2) raise a certain amount of money to start operation, open it once a month, announce the net value of the fund to the fund holders, and redeem the fund once;
(3) In order to attract fund investors, the handling fees should be reduced as much as possible. As fund managers, securities companies charge a certain amount of management fees according to their performance. Its advantage is that it can avoid double taxation, but its disadvantage is that it is difficult to avoid the approval and supervision of the securities management department in its establishment and operation.
3. Virtual
On the surface, the virtual private equity fund looks like entrusted financing, but it actually operates in a fund way. For example, when the virtual private equity fund is set up and raised, it is ostensibly to sign a trust financing agreement with each customer, but these trust financing accounts are combined to operate as a fund, and when buying and redeeming fund units, it is settled according to the net value of the fund. The specific methods can be as follows:
(1) Each fund holder opens a separate sub-account in his own name;
(2) The fund holders * * * jointly contribute to form a master account;
(3) As the manager of the fund, the securities company manages all accounts in a unified way, and all accounts calculate the net value of the fund unit in a unified way;
(4) The securities company tries to make the actual market value of each account equal to the market value calculated according to the net value of the fund unit. If they are not equal, the fund difference between the main account and the sub-account will be transferred to balance at the time of redemption.
The advantage of virtual model is that it can avoid the approval and supervision of the securities management department on the establishment and operation of funds, and it is flexible to set up and avoid double taxation. The disadvantage is that we still haven't got rid of the shackles of entrusted financial management, and we need to further standardize the fund raising, and we are still supervised by the securities management department on the fund operation, and we lack the development advantages of the fund in the expansion of fund scale.
4. Combination
In order to give full play to the advantages of the above three organizational forms, a fund portfolio can be set up to combine several organizational forms. There are four types of combined funds:
(1) the combination of corporate and virtual funds;
(2) the combination of corporate style and contractual style;
(3) the combination of contract and virtual;
(4) the combination of corporate, contractual and virtual.
The status quo of private equity funds
It is precisely because of the above characteristics and advantages that private equity funds have developed very rapidly in the international financial market and have occupied a very important position. At the same time, they have also cultivated investment masters like Soros and Buffett and international financial "snipers". In China, although there is no public and legal private equity investment fund at present, many non-bank financial institutions or individuals engaged in collective securities investment business have already appeared, and to some extent, they already have the characteristics and properties that private equity funds should have. According to reports, the total amount of domestic existing private equity funds is at least 2 billion yuan, most of which have been standardized by using the relevant market regulations and management regulations of the United States, and a large number of industry elites and economists have gathered. But the fly in the ointment is that they can only live in the underground world without sunlight in obscurity. After China's accession to the World Trade Organization, the opening of China's fund market is not far away. According to relevant agreements, foreign funds can enter the China market in five years, and the fierce market competition in the future can be imagined. Therefore, many people of insight have called for giving private equity funds a clear legal status as soon as possible, so that they can enter the sunshine zone as soon as possible. This will not only help standardize the management and operation of private equity funds, but also create a fair, just and open market competition environment, reduce transaction costs, promote financial innovation, and constantly create and enrich financial products and investment channels in the securities market to meet the increasingly diversified investment needs of investors.