The fourth draft of People's Republic of China (PRC) Investment Fund Law has a special chapter to regulate "raising funds from specific targets", some of which stipulate that "the number of investors should be more than 2 and less than 50", "the minimum contribution of each investor should be stipulated in the fund articles of association or fund contract, but it should not be less than 65,438+10,000 yuan" and "the establishment of a specific fund should be filed with the investment fund supervision and management institution of the State Council".
Private equity funds are not underground, illegal and unregulated funds. Compared with Public Offering of Fund, private equity fund refers to a fund that is not for all investors, but for a few institutional investors and wealthy individual investors in a private way. Its sales and redemption are carried out by the fund manager through private consultation with investors, usually in the form of investment letter of intent (private prospectus). In foreign countries, some famous fund companies, such as Quantum Fund and Tiger Fund, are typical private equity funds. Because private equity funds are prone to irregular behaviors, laws and regulations in some countries explicitly limit the maximum number of securities subscribed by private equity funds. If the subscribed securities exceed the maximum number, public offering must be adopted.
The difference between private equity funds and general Public Offering of Fund is mainly reflected in the following aspects:
Differentiated private equity fund public offering fund
Non-public way to raise funds, public way.
Collection target
A few specific investors are mostly individuals or institutional investors with certain risk tolerance and large assets.
Uncertain social public investors
Information disclosure requirements
The public disclosure of relevant information is less. Generally, it only takes half a year or a year to announce the investment portfolio and income privately, which makes the investment more hidden.
Require regular disclosure of detailed investment objectives, investment portfolio, etc.
Preview mode
"Tailor-made" style, investment decisions mainly reflect investors' intentions and requirements.
"Wholesale" style, investment decisions are mainly based on the style and strategy of fund management companies.
Regulatory principles and standards
The supervision is relatively loose, the fund has a high degree of freedom in operation, is less restricted or constrained by the regulatory authorities, and has more flexibility in investment.
There are strict requirements for fund managers; There are strict restrictions on fund investment activities.
Requirements for investors
It has a certain scale of investment funds and a rational investment concept.
Relatively low
danger
Relatively large
Relatively small
The relationship between the two parties
Investors can negotiate with the fund sponsors to agree on the investment direction and objectives of the fund, which has the nature of agreement.
Fund sponsors unilaterally decide related matters, and investors passively accept them.
In view of the characteristics of private equity funds, compared with Public Offering of Fund, private equity funds have the following advantages: (1) Because private equity funds face a few specific investors, their investment objectives may be more targeted, and they can provide tailor-made investment service products according to the special needs of customers; (2) Generally speaking, private equity funds require fewer procedures and documents and are subject to fewer restrictions. General regulations are not as strict and detailed as public offering funds. For example, if the investment restrictions on a single stock are relaxed, an investor can hold more than a certain proportion of fund shares, and the minimum limit on the size of private equity funds is even lower. Therefore, the investment of private equity funds is more flexible; (3) In terms of information disclosure, private equity funds don't need to disclose detailed investment portfolios on a regular basis as in Public Offering of Fund, and generally only need to announce their investment portfolios and income privately for half a year or one year. The government's supervision over them is far looser than that of Public Offering of Fund, so the investment is more hidden and the chances of getting high returns are greater.
However, private equity funds also have obvious defects: private equity funds are relatively loosely regulated by the government, and their operation lacks transparency, and there may be illegal acts such as insider trading and market manipulation, which will not be conducive to the protection of fund holders' interests. Although they may get higher returns, they contain greater investment risks, such as moral hazard and agency risk of fund managers. In addition, the number of fund securities issued in this way is generally small, and investors' recognition and liquidity are poor, so they cannot be listed and traded.