When an enterprise is burdened with high debts and is insolvent and unable to repay them, the original creditor's rights and debts relationship between banks and enterprises can be transformed into equity and property rights relationship through debt-to-equity swap. What are the ways for private equity funds to participate in debt-to-equity swaps? 1. Establishing asset management companies Private equity funds can participate in the establishment of asset management companies and directly participate in debt-to-equity swaps through asset management companies. 2. As the funder of the debt-to-equity swap fund, when a large enterprise implements debt-to-equity swap, due to the huge amount of funds needed to purchase creditor's rights, the implementing agency often adopts the method of "subsidiary setting up a fund", and private equity funds can participate in the fund as funders and get a return on investment. 3. As the manager, the private equity fund manager who initiated the establishment of the fund and registered with China Securities Fund Association can initiate the establishment of the raised private equity fund and manage the assets invested by it. 4. Private equity institutions entrusted with the management of debt-to-equity swap assets can give full play to their own advantages and provide supporting services for asset management companies in the form of asset securitization. By initiating and managing the non-performing asset fund, the equity of the asset management company after conversion is packaged and received for management and then withdrawn, earning management fees and transfer income. 5. After the equity asset management company after the transfer of the transferee asset management company implements the debt-to-equity swap, the exit ways of the equity include IPO, listing on the New Third Board, merger and acquisition or direct transfer to other acquirers. 6. Providing consulting services for the debt-to-equity swap implementation plan In the process of debt-to-equity swap implementation, private equity institutions can participate in coordinating the relationship among multiple creditors of the enterprise as an independent third-party platform, and keep the creditors of all parties in the same position. You can also rely on your own experience in the disposal of non-performing assets and rich investment experience in the field of "raising investment and managing withdrawal" to provide banks with a disposal plan for non-performing assets and design a debt-to-equity swap plan to attract the participation of social capital and increase the success rate of debt-to-equity swap. The law stipulates: Article 5 of the Measures for the Administration of Financial Asset Investment Companies encourages the optimization of the ownership structure of enterprises through debt-to-equity swap, capital write-down of original shareholders and introduction of new shareholders. Support financial asset investment companies to promote enterprise restructuring, effectively exercise shareholders' rights, fulfill shareholders' obligations, and improve corporate governance. Legal objectivity:

Interim Measures for the Supervision and Administration of Private Investment Funds Article 2 The private investment funds mentioned in these Measures (hereinafter referred to as private investment funds) refer to investment funds established within the territory of the People's Republic of China by raising funds from investors in a private way. The investment of private equity fund property includes buying and selling stocks, equity, bonds, futures, options, fund shares and other investment targets agreed in investment contracts. These Measures shall apply to the registration, filing, fund raising and investment operation of a company or partnership established for the purpose of conducting investment activities with funds raised privately and assets managed by a fund manager or general partner. Article 3 of the Interim Measures for the Supervision and Administration of Private Investment Funds shall follow the principles of voluntariness, fairness, honesty and credibility, safeguard the legitimate rights and interests of investors, and shall not harm the interests of the state and the public.