Project selection and feasibility verification

Due to the long investment cycle and low liquidity of private equity, investors usually put forward the following requirements for investment targets in order to control risks:

● High-quality management is particularly important for financial investors who do not participate in enterprise management.

● At least 2 to 3 years of business record, huge potential market and potential growth, and convincing development strategy planning. What investors care about is the "growth" of profits. High growth brings high returns, so we are particularly concerned about the development planning of enterprises.

● Requirements of industry and enterprise scale (such as sales volume). Investors pay attention to different industries and scales, and financial investors will examine the significance of an investment to their portfolio from the perspective of portfolio diversification risk. Most private equity investors will not invest in high-risk industries such as real estate and industries they don't understand.

● Requirements for valuation and expected return on investment. Because it is not so easy to withdraw from the open market, private equity investors demand a higher expected return on investment, at least higher than the return on investment of their listed companies in the same industry, and expect to obtain a "China risk premium" for their investments in emerging markets such as China. A return on investment of 25-30% is usually required.

● The possibility of listing after 3-7 years, which is the main exit mechanism.