In a broad sense, PE refers to the equity investment covering all stages before the initial public offering of an enterprise, that is, the investment made by the enterprise in each stage of seed stage, initial stage, development stage, expansion stage, maturity stage and Pre-IPO. Related capital can be divided into venture capital, development capital, buyout/buy fund, mezzanine capital and working capital according to the investment stage. Pre-IPO capital (such as bridge financing) and others, such as private investment of public equity (PIPE), differential debt of non-performing loans and real estate investment.
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 capital account for the largest part of capital scale. In China, PE mainly refers to this kind of investment.
Equity investment refers to the acquisition of shares of the invested unit through investment. It means that an enterprise (or individual) purchases shares of other enterprises (listed companies or unlisted companies) or directly invests in other units with monetary funds, intangible assets and other physical assets, with the ultimate goal of obtaining greater economic benefits, which can be obtained by sharing profits or dividends or other means.
Equity investment funds usually invest in non-listed companies (that is, "target companies" or "partners") in a holding or non-holding manner. Generally speaking, for an existing enterprise, the purpose of introducing equity investment is to help enterprises seize favorable market opportunities and realize the accelerated growth of enterprise value beyond the historical average. The accelerated growth process of enterprise value is the value creation process of equity investment.
"Private equity fund" (PE for short) is translated into "equity investment fund" in Chinese. Overseas equity investment funds have a history of more than ten years in China, and have helped many mainland entrepreneurs realize their career ideals.
In recent years, there has been a heated discussion on whether to set up equity investment funds in China, and equity investment funds of various backgrounds have been launched one after another. With the concept of "equity investment fund" and its successful cases entering the public's field of vision more frequently, more and more people began to turn their eyes from "value realization" to "value creation", that is, people not only paid attention to how much money PE earned, but also paid attention to how PE made money.
(Expected) profit is the direct purpose of any investment behavior and the rational premise of the existence of investment behavior. No matter what kind of operation mode is adopted, no matter what kind of projects have special preferences, the profitability of equity investment funds comes from their close cooperation with partners and the value creation process based on cooperation.
Private equity ("PE" for short) is usually called private equity investment in China. From the perspective of investment mode, according to the definition of relevant foreign research institutions, it refers to the equity investment in private enterprises, that is, unlisted enterprises. In the process of transaction implementation, the future exit mechanism is considered, that is, through listing, mergers and acquisitions or management buyback, the shares are sold for profit. A few PE funds invest in the equity of listed companies (such as PIPE mentioned later). In addition, some PE investments, such as mezzanine, also use debt investment. However, the above accounts for only a small part, and private equity investment can still be defined as above. Although PE and VC are both investments in pre-listed enterprises, they are quite different in investment stage, investment scale, investment concept and investment characteristics.
At present, many traditional VC institutions are involved in PE business, and many institutions that are traditionally considered to specialize in PE business are also involved in VC projects, which means that PE and VC are only a conceptual distinction, and the boundary between them is becoming more and more blurred in actual business.
In addition, PE funds are also different from the so-called "private equity funds" in the Mainland. PE funds mainly invest in the shares of unlisted companies in the form of private equity, and what we call "private equity funds" mainly refers to funds that raise funds from investors in the form of private equity and manage them, and invest in the securities market (mostly secondary markets), which is mainly used to distinguish Public Offering of Fund from other mutual funds. A registered equity investment fund company shall be registered in the administrative department for industry and commerce, and shall also be filed in the local financial management department.
Fund registration institution refers to an independent institution responsible for fund registration, depository, clearing and settlement, and is an essential hardware facility for the daily operation of the fund market. Its business includes: account management of fund investors, fund registration, liquidation and fund trading, dividend distribution, establishment and custody of fund share holders, etc. China Securities Depository and Clearing Co., Ltd. is an institution registered in China.
The fund company registration institution refers to all relevant industrial and commercial procedures related to the establishment of the fund company, such as business license, tax registration certificate and organization code certificate, including (verification of company name, drafting of articles of association, distribution of shareholders' rights and interests, company employment certificate, determination of company legal person, company registered address, etc.). 1, the name shall conform to the Regulations on the Administration of Name Registration, and the word "investment fund" is allowed in the name of an investment enterprise that has reached the scale.
2. The words "venture capital fund, venture capital fund, equity investment fund, investment fund" in the industry terminology can be used in the name. As an administrative division, "Beijing" is allowed to be used between trade names and industry terms.
3. Fund type: the registered capital (contribution) of the investment fund company is not less than 500 million yuan, all of which are contributed in cash, and the paid-in capital (contribution) at the time of establishment is not less than 654.38 billion yuan; The registered capital shall be fully paid in accordance with the Articles of Association (partnership agreement) within 5 years. "
4. The contribution of a single investor shall not be less than 6,543,800,000 yuan (except for the general partner in a limited partnership).
5. At least three senior managers have experience in the management and operation of equity investment funds or related business experience.
6. The business scope of fund enterprises is approved as: investment, investment management and consulting of non-securities business. (Fund enterprises may apply to engage in other business projects outside the above business scope, but shall not engage in the following business:
(1), granting loans;
(2) publicly traded securities investment or financial derivatives trading;
(3) Raising funds publicly;
7. Managing fund companies: Investment fund management: "The registered capital (contribution) is not less than 30 million yuan, all in the form of monetary contribution, and the paid-in capital (paid-in contribution) at the time of establishment."
8. The investment amount of a single investor shall not be less than 6,543,800 yuan (except for the general partner in a limited partnership).
9. At least three senior managers have experience in the management and operation of equity investment funds or related business experience.
10. The business scope of managed fund enterprises is approved as: investment in non-securities business, investment management and consulting. (Fund enterprises may apply to engage in other business projects outside the above business scope, but shall not engage in the following business:
(1), granting loans;
(2) publicly traded securities investment or financial derivatives trading;
(3) Raising funds publicly;
(four) to provide guarantees for enterprises other than the invested enterprises. Where an equity investment enterprise invests in stocks and other securities of a listed company, the CSRC shall be responsible for examination and approval or filing; if it invests in a non-listed enterprise in the form of equity, it shall go to the filing management department determined by the National Development and Reform Commission or the provincial people's government for filing.
An equity investment enterprise applying for filing shall submit the following documents and materials:
(1) Application for filing of equity investment enterprises.
(2) A copy of the business license of the equity investment enterprise.
(3) A capital statement of the equity investment enterprise.
(4) Articles of association or partnership agreement of the equity investment enterprise.
(5) Commitment letter of capital contribution signed by all investors.
(6) The capital verification report of the capital verification institution on the actual capital contribution of all investors.
(7) A statement by the promoters on whether the funds raised by the equity investment enterprise are legal and compliant.
(8) Resume certification materials of senior managers of equity investment enterprises.
(nine) legal opinions issued by the law firm on the filing documents and materials. If the equity investment enterprise adopts the mode of entrusted management, it shall also submit the entrusted management agreement signed between the equity investment enterprise and the entrusted management institution. If the assets are entrusted to a custodian institution, an entrustment agreement shall also be submitted. Equity investment funds play an active role in economic development. Investors use their own funds as votes, invest the right to use scarce social production resources in the industries that need to be developed most, and invest in the most efficient enterprises in this industry, as long as the products have market and development potential, regardless of whether this enterprise is a small enterprise or a private enterprise. This can greatly improve the allocation efficiency of scarce production resources in the whole society.
A very important function of equity investment funds in traditional competitive industries is to promote the integration of industries, let outstanding enterprises merge and integrate the whole industry, and maximize the positive contribution of outstanding entrepreneurs and effective enterprise organizations to society. Therefore, M&A financing of private equity funds is of great strategic significance to the integration and development of China industries. Equity transfer ceremony refers to a civil legal act in which shareholders of a company transfer their shares to others according to law, so that others can become shareholders of the company. Equity transfer is a common way for shareholders to exercise their equity. China's Company Law stipulates that shareholders have the right to transfer all or part of their capital contribution in a legal way.
The system of free transfer of shares is one of the most successful manifestations of modern company system. In recent years, with the establishment of China's market economy system, the reform of state-owned enterprises and the implementation of the Company Law, equity transfer has become an important form for enterprises to raise capital, reorganize property rights and optimize resource allocation. The disputes caused by this are the most common in company litigation, and the effectiveness of the equity transfer contract is the difficulty in the trial of such cases.
The equity transfer agreement is the intention of the transferor to deliver the equity and charge a premium, and the transferee to pay the premium to obtain the equity. Equity transfer is an act of property right change. After the equity transfer, all the rights and obligations of shareholders to the company based on their shareholder status are transferred to the transferee at the same time, so the transferee becomes a shareholder of the company and obtains shareholder rights. According to the first paragraph of Article 44 of the Contract Law, the equity transfer contract comes into effect upon its establishment.
However, the effectiveness of the equity transfer contract does not necessarily mean the effectiveness of the equity transfer. The entry into force of the equity transfer contract refers to the issue that is legally binding on the parties to the contract, and the entry into force of the equity transfer refers to the issue of when the equity is transferred, that is, when the transferee obtains the shareholder status. Therefore, we must pay attention to the proper performance after the signing of the equity transfer agreement. Restrictions on equity transfer according to law, that is, the conditions set by laws of various countries for equity transfer. This is also one of the most important and complicated restrictions on equity transfer. According to the laws of our country, the restrictions on the transfer of shares according to law mainly include closed restrictions, restrictions on the location of equity transfer, restrictions on the holding time of promoters, restrictions on the qualifications of directors, supervisors and managers, restrictions on the transfer of special shares and restrictions on obtaining their own shares.
(1) Closed restriction Article 35 of China's Company Law stipulates: "Shareholders may transfer all or part of their capital contributions to each other. When a shareholder transfers his capital contribution to a person other than a shareholder, it must be agreed by more than half of all shareholders; Shareholders who do not agree to the transfer shall purchase the transferred capital contribution. If you don't buy the transferred capital contribution, it is deemed that you agree to the transfer.
(2) Restrictions on the place of share transfer For the share transfer of a joint stock limited company, Article 144 of China's Company Law stipulates: "Shareholders must transfer their shares in a legally established stock exchange." Article 146 stipulates: "The transfer of bearer shares shall take effect when the shareholders deliver the shares to the transferee at the legally established stock exchange." Restrictions on such transit places are also extremely rare in the legislation of various countries. This may be related to the dominant idea of management theory in administrative management, but in the corporate legal system, it is naive to mechanically apply administrative management mode as a restriction on equity transfer.
(3) Limitation on the holding time of promoters: Article 147 1 of China's Company Law stipulates: "The shares of the company held by promoters shall not be transferred within 3 years from the date of establishment of the company." The restrictions on the equity transfer of promoters make the rights of promoters unequal to those of other shareholders, which is not commensurate with the equal exercise of rights by various market entities in the socialist market economy.
(4) Restrictions on the qualifications of directors, supervisors and managers. Paragraph 2 of Article 147 of China's Company Law stipulates: "Directors, supervisors and managers of a company shall declare their shares of the company to the company and shall not transfer them during their term of office." Its purpose is to prevent the person in charge of the company from taking advantage of his position to obtain internal information of the company and engage in improper insider equity transactions, thus damaging the legitimate rights and interests of other shareholders who are not directors, supervisors and managers.
5. Restrictions on the transfer of special shares Article 148 of China's Company Law stipulates: "An institution authorized by the state to invest may transfer its shares according to law or purchase shares held by other shareholders. The examination and approval authority and management measures for the transfer or purchase of shares shall be separately stipulated by laws and administrative regulations. " 1In July, 1997, the Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce jointly issued "Several Provisions on the Change of Investors' Equity in Foreign-invested Enterprises". Article 20 stipulates: "The equity transfer agreement and the agreement on amending the original contract and articles of association of the enterprise shall come into effect as of the date of issuing the approval certificate for the change of foreign-invested enterprises. After the agreement comes into effect, enterprise investors shall enjoy relevant rights and undertake relevant obligations in accordance with the revised enterprise contract and articles of association. "
[6] Restrictions on acquiring its own shares: Article 149 1 of China's Company Law stipulates: "A company may not purchase its own shares, except that it cancels its shares or merges with other companies holding its own shares in order to reduce capital." After the company purchases its shares according to law, it must cancel its shares within 10 days, handle the change registration in accordance with laws and administrative regulations, and make an announcement. At the same time, the third paragraph of article 149 also stipulates: "The company shall not accept its shares as the subject matter of mortgage." The "object of mortgage" here should be more accurately expressed as "object of pledge". Because according to Article 75 of China's Guarantee Law, "shares and stocks that can be transferred according to law" should be the object of pledge of rights. Where the company accepts the pledge of its own shares, the pledgor and the pledgee belong to the same person. The restriction on the transfer of equity according to contract refers to the restriction on the pricing of equity transfer according to contract. Such contracts should include contracts between the company and shareholders, between shareholders and between shareholders and third parties. For example, the mutual agreement between some shareholders on the preemptive right of equity transfer and the agreement between the company and some shareholders to buy back equity under certain conditions are all concrete manifestations of restricting equity transfer according to the agreement.