China has no restrictions on the management scale of private equity funds, only on the number of qualified investors.

It is understood that a relatively low threshold has been set on the scale of supervision. Institutions that require the management of securities assets to exceed 6,543.8 billion yuan shall register with the fund industry association.

These institutions include not only the current "sunshine private placement" management institutions, but also PE, VC and other institutions. As long as the products under its management are invested in publicly issued stocks, bonds, fund shares and other securities and their derivatives as stipulated by the China Securities Regulatory Commission, and the cumulative scale exceeds 654.38 billion yuan, they should be registered.

At the same time, in order to prevent bad institutions from increasing their credit through registration, registered institutions need to have paid-in capital of more than100000 yuan, have no record of violation of laws and regulations in the last three years, and require qualified personnel.

Considering that the operation form of private equity funds is relatively flexible, investors have certain risk identification and tolerance, private equity funds are not publicly issued to the public, and external risks are small. From the perspective of the Interim Measures, the supervision of private equity funds by the CSRC is obviously different from that of public offering funds.

According to the person in charge of the relevant departments of the CSRC, the Interim Measures mainly stipulate and refine the matters clearly required by laws such as the registration conditions of private equity fund managers, the standards of qualified investors, fund publicity and promotion, fund filing, and employee management. In addition, it also stipulates the bottom line norms that fund managers and their employees should abide by, such as giving priority to protecting the interests of fund share holders, preventing insider trading and interest transfer, prohibiting embezzlement and misappropriation of fund property, defrauding customers and "rat warehouses".

There are no restrictive requirements for the daily management of private fund managers and the investment operation of private funds, and the fund managers make their own arrangements according to their own conditions and fund contracts.

However, 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 debt investment, which gets a certain proportion of invested capital, equity investment gets 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.

3. Equity investment can provide all-round value-added services. Private equity investment not only injects capital into the target enterprise, but also injects advanced management experience and various value-added services, which is also a key factor to attract enterprises.

While meeting the financing needs of enterprises, private equity investment funds can help enterprises improve their management ability, expand procurement or sales channels, integrate the relationship between enterprises and local governments, and coordinate the relationship between enterprises and other enterprises in the industry. All-round value-added services are the highlight and competitiveness of private equity investment funds.

Extended data:

Supervision of private fund raising behavior;

1, standardize the qualifications of private equity funds. The main qualifications of fundraising institutions are determined as private fund managers registered with the Fund Industry Association and institutions registered with the China Securities Regulatory Commission to obtain the qualification of fund sales business and become members of the China Fund Industry Association.

The fund industry association said that this move can eliminate the disorderly third-party financial institutions in the market, avoid the increasingly serious hidden dangers of fraud and illegal fund-raising caused by the regulatory vacuum, and better safeguard the interests of investors.

2. Standardize the agency responsibility of private equity funds. It is clear that the private equity fund is raised and established by the manager, and as the first responsible person, it bears corresponding responsibilities in the process of fund operation, with special emphasis on the trustee obligations of the private equity fund manager and the related responsibilities of investor suitability confirmation.

3. Improve the procedures for raising private equity funds. Among them, in terms of qualified investors, the exposure draft stipulates that no institution or individual may purchase private equity funds for the purpose of illegal split and transfer. In addition, it is stipulated that fundraising institutions should give investors a cooling-off period of not less than one day before signing private equity fund contracts.

4. In terms of the special account for raising funds and the safety of funds, it is stipulated that private fund managers must jointly open a special account for raising and settlement funds of private funds with the regulatory authorities before raising private funds, so as to realize the collection and management of raising and settlement funds.

5. In view of the current phenomenon that the rights and responsibilities of fundraising management are not divided, the exposure draft stipulates that private fund managers should sign fund sales agreements with fund sales organizations, and the rights, obligations and responsibilities of managers and fund sales organizations should be clearly defined, and fundraising organizations should truthfully and comprehensively inform investors of relevant contents. This agreement is an annex to the fund contract.

References:

Baidu Encyclopedia-Private Equity Fund Raising