In China's financial market, "private fund" or "underground fund" is usually a collective investment that is privately raised by specific investors, as opposed to the securities investment fund that is supervised by the competent department of China government and publicly issues beneficiary certificates to unspecified investors. There are basically two ways, one is a contractual collective investment fund based on signing the entrusted investment contract, and the other is a corporate collective investment fund based on * * * contributing shares to establish a joint-stock company.
Private placement is strictly restricted in China, because it can easily become "illegal fund-raising". The difference between them lies in whether to raise funds for the general public and whether the ownership of funds has been transferred. More than 50 people raise funds and transfer them to personal accounts, which is regarded as illegal fund-raising. Illegal fund-raising is a very serious economic crime that can be sentenced to death, such as Wu Ying in Zhejiang, Tang Wanxin in Delong and Madoff in the United States.
Private real estate investment funds (few now, such as Jincheng Capital and Xinghao Investment), private equity investment funds (that is, investing in the equity of unlisted companies, PE targeting IPO, such as CDH, Hony, KKR, Goldman Sachs, Carlyle and Han Hong) and private venture capital funds (that is, VC with high risks, such as Lenovo Investment, Softbank and IDG).