How to understand private equity investment is better? Does private investment also need a certain amount of capital reserve? The following is for you from Bian Xiao. I hope I can help you to some extent.
What is a private equity investment fund?
Private equity investment fund (PE) is usually called private equity investment in China. From the perspective of investment methods, according to the definition of relevant foreign research institutions, it refers to the equity investment in private enterprises, that is, unlisted enterprises. In the process of transaction implementation, the future exit mechanism is considered, that is, through listing, mergers and acquisitions or management buyback, the shares are sold for profit. A few PE funds invest in the equity of listed companies (such as PIPE mentioned later). In addition, some PE investments, such as mezzanine, also use debt investment.
What does private equity fund mean?
In fact, private equity fund refers to a fund raised by private equity or directly from a specific group, which corresponds to Public Offering of Fund. Then private equity is actually a kind of funds mainly raised by the people or directly from specific groups. Public offering of shares is actually open to the public, so private equity is actually closed to the public. In other words, the groups actually faced by stock private placement are more specific and specific.
Characteristics of private equity funds
The operation mode of private equity fund is equity investment, that is, through capital increase and share expansion or share transfer, the shares of unlisted companies are obtained, and profits are made through share value-added transfer. The characteristics of equity investment include:
1. The return on equity investment is very rich. Unlike creditor's rights investment, which earns a certain percentage of interest income from invested capital, equity investment obtains dividends from the company's income according to the proportion of capital contribution. Once the invested company is successfully listed, the profit of private equity investment fund may be several times or dozens of times.
2. Equity investment is accompanied by high risks. Equity investment usually needs to go through several years of investment cycle, and because it is invested in developing or growing enterprises, the development risk of the invested enterprises themselves is very high. If the invested enterprise ends in bankruptcy, the private equity fund may lose all its money.
What does private placement mean?
Private placement refers to private placement funds. With the development of financial investment, private equity funds are gradually loved by investors, but some friends still don't know much about private equity funds. So what does private placement mean?
Private investment funds refer to investment funds that are raised from qualified investors through non-public offering and invested in stocks, equities, bonds, futures, options, fund shares and other investment targets agreed in investment contracts. Private equity fund is a financing method compared with public equity fund.
What are the common problems of funds?
For beginners, we should pay attention to the following questions:
1. What is the fund operation mode? Funds can be divided into OTC funds and OTC funds according to different trading places. OTC funds refer to funds that are not traded on the stock exchange. The fund is traded on the same day and the share is confirmed on the second trading day (non-real-time trading). OTC funds refer to funds traded on stock exchanges. Most OTC funds are traded on the same day and can only be sold on the second trading day (real-time trading), but some of them are sold.
2. How to choose a high-quality target: The quality of the fund has a great relationship with the fund manager. The rise and fall of the fund mainly depends on the investment ability of the fund manager. The stronger the investment ability of the fund manager, the faster the fund may rise and earn more. Therefore, investors can choose high-quality funds from three aspects: fund manager, historical performance and maximum withdrawal. The longer the fund manager works, the better. The higher the historical performance, the lower the maximum withdrawal value.
3. What are the types of funds? According to different classification methods, the types of funds are different, the most important ones are money funds, bond funds, hybrid funds, stock funds, index funds, linked funds, ETF funds, LOF funds and so on.
4. What is the dividend of the fund? Fund dividend is to distribute a part of the net value of the fund to investors and distribute it according to the share held by investors. It is worth noting that fund dividends will not bring actual benefits to investors.