The operation mode of private equity investment funds is equity investment, that is, through capital increase and share expansion or share transfer, it acquires shares of unlisted companies and makes profits through share appreciation transfer.

The characteristics of equity investment include: 1. The income of private equity investment funds is very generous. Unlike debt investment, which obtains a certain percentage of interest income from the invested capital, equity investment obtains dividends from the company's income in proportion to the capital contribution. Once the invested company is successfully listed, private equity investment

The fund's profit may be several times or dozens of times.

Data shows that three investment companies including Morgan Stanley invested 500 million yuan in Mengniu Dairy, and received a return of approximately HK$3 billion after Mengniu Dairy was listed; institutions led by Goldman Sachs invested in Wuxi Suntech, and with its successful listing, the company has continued to invest in Wuxi Suntech.

Within one year, a return of more than ten times was obtained; Tongzhou Electronics was listed on the domestic A-share SME board, and the four institutions behind it, including Shenzhen Dachen Venture Capital, obtained a return on investment of more than 20 times.

2. The stability of private equity investment funds is strong. In terms of medium and long-term performance, the products of private equity investment funds are slightly better than the industry average.

On the one hand, large-scale private equity managers are mostly veterans of the "public equity school" and "brokerage school". They have more prominent ability and emphasis on risk control. They can stop losses in a timely manner and resolutely control risks in a fluctuating market environment, often reaping rewards.

More stable performance; on the other hand, private equity investment fund managers have many years of investment operation experience, which helps them to conduct more accurate judgments on the general trend and have better adaptability to changes in market styles.

3.

Private equity investment funds have a strong value creation function. Private equity investment funds invest in the real economy and are the integration of monetary capital, management, technology, and physical capital at the real economy level. The improvement of resource allocation efficiency in the real economy is the value

expression of creation.

When private equity investment injects capital into target companies, it also injects advanced management experience and various value-added services, which is also a key factor in attracting companies.

While meeting the financing needs of enterprises, private equity investment funds can help enterprises improve their operation and management capabilities, expand procurement or sales channels, integrate the relationship between enterprises and local governments, and coordinate the relationship between enterprises and other enterprises in the industry.

A full range of value-added services is the highlight and competitiveness of private equity investment funds.