The parent fund of equity investment mainly has three businesses: primary investment, secondary investment and * * * simultaneous investment.
Primary investment
Initial investment refers to the investment made by FOF when raising PE. In the initial stage of FOF development, it mainly engaged in the primary investment business of PE, which was the initial business of FOF.
Secondary investment
Secondary investment refers to FOF's investment in PE secondary market, which mainly has two forms: purchase of fund shares of surviving PE and/or subsequent investment; Purchase the equity of the invested portfolio company held by PE.
Direct investment
Direct investment means that FOF directly invests in the company's equity. In practice, FOF usually makes joint investment with the PE it invests in, and FOF plays a negative role, letting the first investor, namely PE, manage this investment.
As the main regulatory agency for the establishment and operation of private equity funds in China at present, the Notice on Promoting the Standardized Development of Equity Investment Enterprises (Document No.2864) issued by the National Development and Reform Commission 2011marks the introduction of the first national equity investment fund management standard in China.
According to Document No.2864, all equity investment enterprises established in China (including the "equity investment parent fund" with equity investment enterprises as the target), except venture capital enterprises and equity investment enterprises wholly owned by an institution, shall be filed with the National Development and Reform Commission or the provincial filing management department according to whether their scale reaches 500 million yuan (or equivalent foreign currency). The relevant guidelines in document No.2864 "suggest" (actually "requirements in practice") that the investment amount of a single investor in all newly established equity investment enterprises shall not be less than100000 yuan. In the current filing practice, the successful filing of the "equity investment parent fund" is mainly a special purpose carrier for investing in a specific fund (far from the concept of FOF in Europe and America, and does not have the three functions of the aforementioned market-oriented FOF), as long as the "equity investment parent fund" itself meets the filing requirements of direct investment funds, it mainly includes: (1) the investment amount of a single investor is not less than 6,543,800 yuan. (b) The number of investors shall not exceed 50 (if the investor is an unincorporated institution, it needs to be checked like a direct investment fund); (c) There is no other illegal fund-raising. Therefore, the current filing management actually has the nature of substantive review. Under the background that No.2864 requires all equity investment enterprises to put on record, in addition to well-known first-line funds such as CDH, Hony, CITIC Industry, there are at least thousands of funds and tens of thousands or even hundreds of thousands of investors behind them. The substantive examination of so many funds and investors by filing management departments will pose great challenges to filing management departments at all levels in terms of human resources and professional level, and may also provide rent-seeking space for relevant filing officials. In addition, at present, the filing management department does not issue any certificate of the qualification of the "equity investment parent fund" to the filing fund or the outside world. Therefore, for potential investors, it is impossible to confirm whether the fund has been identified as the "equity investment parent fund" referred to in Document No.2864 except for the commitment guarantee of the fund itself.