The definition between the three:
Investment banks are intermediaries, serving enterprises, PE and VC. Both PE and VC are investors, which is the biggest difference between investment banks and the other two. Generally, a slightly larger investment bank will have its own pe and vc, so sometimes pe and vc will be regarded as investment bank business.
PE generally invests in mature enterprises, and its profit model has been relatively stable, so it can quickly quit. PE does more PRE-IPO business.
Private equity
Private equity investment in a broad sense covers all stages of equity investment before the initial public offering of enterprises. That is, the investment in enterprises in seed stage, initial stage, development stage, expansion stage, maturity stage and Pre-IPO stage.
Related capital can be divided into venture capital according to the investment stage.
Capital), developmentcapital (development capital), M&A fund (buyout/acquisition fund), mezzanine capital (mezzanine).
Capital), losses, pre-listing capital (such as
Bridgefinance), and other private equity investments such as after listing.
That is, PIPE), bad debt, bad debt and real estate investment (real
Estate) and so on (the above-mentioned parts also overlap). In a narrow sense, PE mainly refers to the private equity investment part of mature enterprises that have formed a certain scale and generated stable cash flow, mainly refers to the private equity investment part in the later stage of venture capital, in which M&A funds and mezzanine funds are the parts with the largest capital scale. In China, PE refers to the latter to distinguish it from VC.
Domestic active PE investment institutions can be roughly divided into the following categories:
Specialized independent investment funds, such as Carlyle Investment Group and 3ipuorgetc.
Direct investment departments under large diversified financial institutions, such as Morgan Stanley Asia, JPMorgan Chase, Goldman Sachs Asia, Citigroup Capital, etc.
Newly established private equity investment funds, such as Hony Capital and Shen Bin Investment. After the promulgation of laws and regulations on Sino-foreign joint venture industrial investment funds;
Investment funds of large enterprises, which serve the development strategy and investment portfolio of their groups, such as GECapital.
Others such as Temasek and GIC.
Both PE and VC make equity investment in unlisted enterprises through private placement, and then sell their shares through listing, merger or management buyback to make profits.
The simple way to distinguish VC from PE is that VC invests in the early stage of the enterprise and PE invests in the late stage. Of course, the division of early stage and late stage makes VC and PE different in investment concept and scale. PE invests in enterprises in seed stage, initial stage, development stage, expansion stage, maturity stage and Pre-IPO stage, so PE in a broad sense includes VC.
In China, VC is an exotic product, which was originally translated into "venture capital" by China media and remained in use until the end of the 20th century. Later, it was translated into "venture capital" according to an encyclopedia. As a result, the concept of "venture capital" used in some original documents and government documents has gradually evolved into "risk"
The translation of "venture capital" has appeared in the documents of the National Development and Reform Commission, the Ministry of Science and Technology and other ministries. However, these two statements are incompatible with each other, and even the policy priorities considered from this are quite different. "Venture capital" discusses investors' risk awareness and investment impulse, and "venture capital" emphasizes the entrepreneurial characteristics of the invested object.
Because both parties to the dispute have the right to speak in administration and legislation, the documents issued by the National People's Congress and the State Council are often "venture capital", while the documents issued by the National Development and Reform Commission, the Ministry of Science and Technology, the Ministry of Commerce and other ministries are mostly "venture capital", such as the Interim Measures for the Administration of Venture Capital Enterprises, which came into effect in March 2006. Later, after many investigations, these two understandings were actually expressed from different angles and positions, but they could not be completely summarized.
Therefore, in the Outline of the National Medium-and Long-Term Science and Technology Development Plan (2006-2020) issued by the State Council and its supporting policies, the two meanings of "entrepreneurship" were written into government documents for the first time. Therefore, a large-scale investigation report jointly launched by the Ministry of Science and Technology, the Ministry of Commerce and the China Development Bank was renamed "China Venture Capital Development Report" in 2006. At this point, the official interpretation and expression gradually unified.
In China, many colleagues translated the concept of PE into "private equity", "private equity", "private equity investment" and "private equity capital". The important concepts directly related to it are:
PE investment, private equity investment;
PE funds and private equity funds; Private equity is not only a financing tool, but also a form of equity expression after investment and financing.
Private equity is homogeneous with corporate bonds, loans and stocks. But its essential characteristics (differences) mainly lie in:
First, private equity (PE) is not a financial instrument of creditor's rights, similar to stocks, and is essentially different from corporate bonds and loans.
Secondly, private equity (PE) belongs to private equity in financing mode, which is similar to loans and is essentially different from corporate bonds and stocks.
Third, private equity (PE) is mainly the rights and interests generated by investing in enterprises that have not yet been IPO (initial public offering);
Fourth, private equity (PE) cannot be traded freely in the stock market;
Fifth, other omissions.
From a legal point of view, private equity (PE) does not reflect the relationship between creditor's rights and debts. It is essentially different from debt. In a word, private equity is a kind of equity, which can not only play the financing function, but also represent the investment right.
VC generally invests in start-ups, which are still immature and have great uncertainty in the future. Investment 10 may succeed one or two.
venture capital
take a risk
The five stages of capital, including seed stage, initial stage, growth stage, expansion stage and maturity stage, all involve high risks, which are embodied in project screening, due diligence, post-event monitoring, intellectual property rights, technology selection, public policy, highly asymmetric information, moral quality, management team, business partners, financial supervision, environment, taxation, politics and communication platform. In western countries, according to incomplete statistics, venture capital
For every 10 project invested by capitalists, only 3 are successful and 7 are unsuccessful. It is precisely because of this that the venture capital circle will adhere to the principle of "don't put eggs in one basket".
The purpose of venture capital is not to hold shares. Whether it is successful or not, withdrawal is an inevitable choice for venture capital. The exit methods of citing venture capital include initial public offering (IPO), acquisition and liquidation. At present, the main exit channels for domestic venture capital companies to carry out IPO are:
Listed overseas as an offshore company;
Domestic joint-stock companies issue H shares abroad to achieve overseas listing;
Domestic companies are listed indirectly by backdoor overseas, and domestic companies are listed by backdoor overseas;
The joint-stock company established in China is listed on the main board of China;
Indirect listing of domestic A shares of domestic companies through backdoor;
Another indirect listing method is the backdoor listing of A shares of domestic companies.
The difference between pe and vc
Both PE and VC are capital contributions to enterprises before listing, and they are quite different in terms of capital contribution period, capital contribution scale, capital contribution concept and capital contribution characteristics. At present, many traditional VC institutions have participated in PE affairs, and many institutions that are traditionally considered to be specialized in PE affairs have also participated in VC projects, which means that PE and VC are only a conceptual difference, and the boundary between them is becoming more and more blurred in practical affairs. In addition, PE funds are essentially different from what the mainland calls "private equity funds". PE funds mainly invest in the equity of unlisted companies by private placement. Private placement funds mainly refer to funds that raise funds from investors through private placement to handle and invest in securities malls (mostly secondary malls). The following is a concrete comparison between the two.