Private placement refers to obtaining shares of non-listed companies through capital increase and share expansion or share transfer, and making profits through share value-added transfer.

Compared with Public Offering of Fund, private placement is a company or partnership established for the purpose of investment activities, and it is a non-public fundraising from specific investors.

Assets shall be managed by the fund manager or general partner, and private placement shall not promise to protect capital or gain capital.

Private placement is a way to issue international bonds. When issuing bonds through private placement, the fundraiser does not need to sell bonds publicly, but only needs to be subscribed by banks, insurance companies or trust and investment companies.

Private placement bond's issuance is usually registered, and issuers can disclose their business less.

According to different standards, private equity funds can be divided into three categories:

1, securities investment private equity fund

As the name implies, the fund mainly invests in financial derivatives such as securities, and hedge funds such as Quantum Fund, Tiger Fund and Jaguar Fund are its typical representatives. These funds are basically open-ended private equity funds established by managers according to their own investment strategies. It can adjust the investment portfolio and change the investment concept according to the needs of investors and the development trend of the market.

Investors can redeem according to the net value of the fund. Its advantage is that it can be customized according to the requirements of investors. The funds are relatively concentrated, and the investment management process is very simple. It can use a lot of financial leverage and various forms of investment, and the rate of return is relatively high.

2. Industrial Private Equity Fund

This kind of fund mainly invests in industry. Because fund managers have a deep understanding of certain industries, such as information industry and new materials, and have extensive connections, they can initiate the establishment of industrial private equity funds in the form of limited partnership. The manager symbolically spent only a small amount of money, and most of it was collected.

Managers should bear unlimited responsibilities while gaining a lot of investment income. Generally speaking, such funds are closed for 7-9 years, and will be settled in one lump sum after expiration.

3. Venture private equity funds

Its investment target is mainly the rights and interests of small and medium-sized high-tech enterprises in the initial stage and growth stage, in order to share the high profits brought by their rapid growth. Its characteristics are long payback period, high return and high risk.

What are the risks of private placement products?

The risk of opaque information.

Because private equity funds do not have strict information disclosure requirements, information opacity is the biggest risk of private equity funds. All processes involving investment operation management, such as investment scheme, fund allocation and project tracking management, may have the problem of insufficient information disclosure.

2. Investors' ability to resist risks is low.

Many investors participate in private equity investment because they value the high returns of private equity funds, but high returns also correspond to high risks. Many investors do not have the corresponding ability to resist risks, so we should pay attention to the risks of such private equity funds when investing.