If measured by the narrow concept of PE (that is, VC is excluded), as mentioned earlier, the emergence of PE investment in mainland China is very late.

The International Finance Corporation (IFC)'s investment in the Bank of Shanghai in 1999 can be considered to have initially possessed the characteristics of PE. However, most of the industry believes that the first typical PE case in mainland China was the famous New Bridge Capital in the United States in June 2004.

Acquired 17.89% of the controlling stake in Shenzhen Development Bank from the Shenzhen Municipal Government for RMB 1.253 billion. This was also the first major case of an international M&A fund in China. It also created the first company controlled by an international M&A fund.

China Commercial Bank.

Since then, many similar PE cases have followed, and the PE investment market has become increasingly active.

At the end of 2004, Warburg Pincus and other institutions in the United States jointly acquired 55% of the shares of Harbin Pharmaceutical Group, creating the first case of an international M&A fund acquiring a large state-owned enterprise. After entering 2005, the PE field was even more prosperous, and major investment cases continued to emerge.

, which is characterized by the marriage of internationally renowned PE institutions and domestic financial giants, and its investment scale is staggering.

First, in the third quarter of 2005, internationally renowned PE institutions participated in the investment attraction work of commercial banks such as Bank of China and China Construction Bank. Then on September 9, 2005, Carlyle Group’s US$400 million investment proposal for Pacific Life was approved by Pacific Insurance Group

The board of directors approved that Carlyle will acquire 24.975% of CPIC Life.

This is also the largest PE transaction in China so far.

In addition, the Carlyle Group's negotiations to acquire absolute controlling stake in XCMG Machinery are also entering the final stage, and are expected to become the first case of an international M&A fund acquiring absolute controlling stake in a large state-owned enterprise.

In addition, large domestic enterprises frequently conduct mergers and acquisitions overseas, and PE is also involved.

For example, Lenovo acquired IBM's PC department at a high price of US$1.25 billion, and three PE funds injected US$350 million into Lenovo.

Previously, Haier announced a bid for US$1.28 billion to acquire Maytag, an established American home appliance manufacturer. The acquisition team headed by Haier also included two PE funds.

In China, PE fund investment pays more attention to emerging private companies. Since the latter grow rapidly, have clean equity and have no historical problems, but generally lack bank financial support, they have become the favored target of PE funds.

At the same time, some PE funds have also participated in the reform of state-owned enterprises, making great contributions to improving the corporate governance structure of state-owned enterprises, introducing advanced foreign management concepts, and enhancing the internationalization process of state-owned enterprises.

Currently, most of the PE investment institutions active in China are foreign PE funds. There are still very few domestic related institutions. There are only a few such as CDH, which evolved from the direct investment department of China International Capital Corporation, and Hony Capital, a subsidiary of Lenovo.

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On the one hand, this is because the concept of PE entered China relatively late. On the other hand, PE investment generally requires strong financial strength. Compared with foreign PE, which often invests hundreds of millions of dollars in a project, most domestic companies or individuals can only feel inferior and rarely have the ability.

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Currently, domestic active PE investment institutions can be roughly classified into the following categories: first, specialized independent investment funds; second, direct investment departments under large diversified financial institutions; third, after the introduction of regulations on Sino-foreign joint venture industrial investment funds,

The newly established private equity investment fund; the fourth is the investment fund of large enterprises, serving the development strategy and investment portfolio of its group; the driving force and current unfavorable factors of PE investment in China, China's rapid economic growth and constantly improving investment environment,

It is undoubtedly a huge driving force for PE investment in China, which is mainly reflected in the following aspects: 1. China is one of the "BRICs" (Brazil, Russia, India and China).

The sustained and rapid economic growth contains huge investment opportunities.

2. Infrastructure construction has been gradually improved, and the degree of informatization across the country has increased, greatly improving the hardware environment for investment.

3. The legal system is gradually improved: the "Company Law" and "Securities Law" are revised, and laws related to venture capital will also be formulated.

4. After joining the WTO, more industries will be fully opened to foreign private capital, such as retail, finance and telecommunications.

5. The continuous improvement of the capital market: the establishment of the small and medium-sized enterprise board (prelude to the GEM), shareholding reform (the realization of full circulation).

6. The restructuring of state-owned enterprises, the retreat of the state and the advancement of the people, and the state's encouragement of small and medium-sized state-owned enterprises to implement MBO provide huge opportunities for PE.

Disadvantageous factors include: first, the domestic exit mechanism is still not ideal, and full circulation has yet to be resolved.

Second, the two documents issued by the State Administration of Foreign Exchange (Document No. 11 and Document No. 29) have a negative impact on offshore capital operations, red chip listings and other foreign exit methods.

Third, some domestic industries also have restrictions on the proportion of foreign capital and private capital investment.

Fourth, in terms of the legal environment, there are currently some provisions in the Company Law that are unfavorable to PE investment, such as restrictions on the proportion of external investment and double taxation.

Finally, the domestic integrity system is not perfect and the awareness of integrity needs to be improved.