Private placement is compared to public placement. It is defined as public placement and private placement, or public placement securities and private placement securities based on the difference in the method of issuing securities and whether the securities are issued to the unspecified public or publicly issued.

"Private equity funds" or "underground funds" often referred to in the financial market are a kind of collective investment that is not publicly promoted and privately raises funds from specific investors.

There are basically two methods. One is a contractual collective investment fund based on the signing of an entrusted investment contract, and the other is a corporate collective investment fund based on the joint investment of funds to establish a joint-stock company.

First, private equity funds raise funds through non-public means.

Secondly, in terms of fundraising targets, private equity funds only target a small number of specific investors. Although the circle is small, the threshold is not low.

Third, unlike the strict information disclosure requirements of public funds, private equity funds have much lower requirements in this regard. In addition, government supervision is relatively loose. Therefore, the investment of private equity funds is more concealed, the operation is more flexible, and the investment of private equity funds is relatively high.

There is also a greater chance of revenue returns.

The so-called private equity funds, relative to public equity funds, are characterized by raising funds through non-public means.

Because of this non-publicity, private equity funds have become the most secretive capital force in China's capital market.

The fourth draft of the "Investment Fund Law of the People's Republic of China" has a special chapter to regulate "funds raised from specific objects", some of which include "the number of investors should be between 2 and 50 people", " The minimum capital contribution of each investor is stipulated in the fund charter or fund contract, but shall not be less than 100,000 yuan." "The establishment of specific funds must be filed with the investment fund regulatory agency of the State Council," etc., which means that my country's fund industry is brewing. With an adjustment and breakthrough, the pace of legalization and marketization of private equity funds will accelerate.

Private equity funds are not underground, illegal and unregulated funds. They are relative to public funds. They are not open to all investors, but are raised through non-public means to a small number of institutional investors and wealthy individual investors.

For a fund established with funds, its sales and redemptions are carried out by the fund manager through private negotiations with investors, and funds are generally raised in the form of investment letters of intent (non-public prospectuses).

In foreign countries, some famous fund companies such as Quantum Fund and Tiger Fund are typical private equity funds.

Since private equity funds are prone to irregular behaviors, the laws and regulations of some countries clearly limit the maximum number of subscribers for private equity fund securities. If the number of subscribers exceeds the maximum number, public offering must be adopted.

The differences between private equity funds and general public funds are mainly reflected in the following aspects: Differences Private equity funds Public fund fundraising methods are non-public methods and public funds are raised from a small number of specific investors, mostly individuals or individuals with certain risk tolerance and large asset scales

Institutional investors and uncertain public investors require less public disclosure of relevant information. Generally, it only takes half a year or a year to privately announce investment portfolios and returns. Investments are more concealed and require regular disclosure of detailed investment goals and investment portfolios.

Service methods such as "tailor-made" type, investment decisions mainly reflect the intentions and requirements of investors, "wholesale" type, investment decisions are mainly based on the style and strategy of the fund management company. Supervision principles and standards are relatively loose, and there is considerable freedom in fund operations.

degree, are less subject to restrictions or constraints from regulatory authorities, and are more flexible in investment. There are strict requirements for fund managers; there are strict restrictions on fund investment activities, and investors are required to have a certain scale of investment funds and a relatively rational investment philosophy.

Lower risk, relatively large, relatively small. The relationship between the two parties. Investors can negotiate with the fund sponsor and jointly determine the investment direction and goals of the fund. It is an agreement and the fund sponsor unilaterally determines relevant matters. The investor passively accepts it.

Characteristics of private equity funds. Compared with public equity funds, private equity funds have the following advantages: (1) Since private equity funds target a small number of specific investors, their investment goals may be more targeted and they can provide tailor-made services according to the special needs of customers.

Customized investment service products; (2) Generally speaking, private equity funds require fewer procedures and documents and are subject to fewer restrictions. General regulatory requirements are not as strict and detailed as public equity funds. For example, investment restrictions on single stocks are relaxed.

A certain investor can hold more than a certain proportion of fund shares, and the minimum limit on the size of private equity funds is lower. Therefore, the investment of private equity funds is more flexible; (3) In terms of information disclosure, private equity funds do not have to be like public equity funds.

Detailed investment portfolios are disclosed regularly, and it generally only takes half a year or a year to privately announce the investment portfolios and returns. The government's supervision of them is much looser than that of public funds, so investments are more hidden and the chances of obtaining high-yield returns are greater.

However, private equity funds also have obvious shortcomings: private equity funds are subject to relatively loose government supervision, and their operations lack transparency. There may be insider trading, market manipulation and other violations, which will be detrimental to the protection of the interests of fund holders and may lead to greater gains.

Along with high returns, there are also greater investment risks such as moral hazard and agency risk for fund managers.

In addition, the number of fund securities issued in this way is generally small, has poor investor recognition and liquidity, and cannot be listed and traded.