1. The development of private equity market is conducive to the establishment of a multi-level capital market system in China. On June 5438+ 10, 2004, the State Council clearly pointed out in "Several Opinions on Promoting the Reform, Opening-up and Stable Development of the Capital Market": "On the basis of overall consideration of the rational layout and functional orientation of the capital market, a multi-level capital market system will be gradually established to meet the financing needs of different types of enterprises." The situation of China's capital market is that the development of each component in the market system is extremely unbalanced, and the indirect financing led by long-term bank credit far exceeds the direct financing in the securities market. At the same time, the bond market in the securities market is too small, and corporate bonds are almost at a standstill. The private equity market is limited to venture capital, and the complete private equity market should include the equity investment and financing activities carried out by enterprises in the seed stage, initial stage, development stage, expansion stage, maturity stage and Pre-IPO stage.
2. By developing the private equity market, we can promote the combination of high technology and financial capital supported by emerging technology enterprises, thus promoting China's technological innovation and economic development. Private equity investment at this level actually refers to venture capital. In recent years, people have fully demonstrated the role and importance of developing venture capital in China, so I won't go into details here.
3. Financing M&A activities by developing private equity capital can improve the operational efficiency of China enterprises. Through private equity financing and mergers and acquisitions by market means, the survival of the fittest or strong alliance can be realized, providing a market-oriented channel for realizing "national retreat and democratic advancement". Through mergers and acquisitions, economies of scale and synergy can be brought into play in management and strategy, thus promoting the optimal allocation of limited resources within the national economy and enhancing social welfare.
4. Investing in all kinds of venture enterprises, medium-sized enterprises and enterprises that need mergers and acquisitions through private equity funds and carrying out value activities such as enterprise management, support, guidance, control and supervision can not only greatly improve the equity structure and corporate governance structure of small and medium-sized enterprises, but also enhance the value of enterprises. This is very important for small and medium-sized enterprises in China that have embarked on the road of internationalization.
For some enterprises with good market prospects, but still in debt crisis or financial difficulties due to poor management, the private equity market can help these enterprises tide over the difficulties and embark on the right track of development through equity financing and resource integration. This is to save a lot of social bankruptcy costs.