2. Private equity funds are generally closed-end partnership funds and are not listed and circulated. During the closed period of the fund, the partnership investors can't withdraw the funds at will, and the closed period is generally 5 years to 10 years, so the operation period is stable and there is no pressure to redeem the funds. Compared with 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 relatively loose, so the investment of private equity funds is more hidden and professional, and the return on income is usually higher.
First, the corporate style
Private equity-related comic book company-style private equity funds have a complete corporate structure, and their operations are more formal and standardized. Corporate private equity funds (such as "so-and-so investment company") are easy to set up 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", and its business scope includes securities investment;
(2) The number of shareholders of the "investment company" should be small, and the investment amount should be relatively large, which not only ensures the nature of private placement, but also has a large scale of funds;
(3) The funds of the "investment company" are managed by the fund manager. According to international practice, managers charge fund management fees and interest incentive fees to enter the operating costs of "investment companies";
(4) The registered capital of the "investment company" is re-registered once a year at a specific time, and nominal capital increase and share expansion or capital reduction and share reduction are carried out. If necessary, investors can redeem their capital contribution at a specific time every year, and at other times, investors can transfer their shares by agreement or trade in the OTC market. "Investment company" is essentially a private equity fund of enterprises, which can be raised at any time, but only redeemed once a year.
However, corporate private equity funds have a disadvantage, that is, there is repeated taxation. Methods to overcome the shortcomings are:
(1) registered private equity funds in tax havens such as Cayman and Bermuda;
(2) Register the enterprise private equity fund as a high-tech enterprise (which can enjoy many preferential treatments) and register it in a place with relatively favorable tax;
(3) Backdoor, that is, in the establishment and operation of the fund, joint or acquisition of an enterprise (preferably a non-listed company) that can enjoy tax incentives, and take this as a carrier.
Second, the type of contract
The organizational structure of contractual funds is relatively simple. The specific approach can be:
(1) As the fund manager, the securities company chooses a bank as the custodian;
(2) raise a certain amount to start operation, open it once a month, announce the net value of the fund to the fund holders, and handle a fund redemption;
(3) In order to attract fund investors, the handling fee should be reduced as much as possible. As fund managers, securities companies charge a certain management fee 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 the process of establishment and operation.