The PE secondary market is still a strange concept in China, which mainly refers to the purchase of corresponding private equity from the existing LP, and also includes the purchase of part or all of the portfolio of private equity funds from GP. The significance of the emergence of the secondary market is to meet the liquidity needs of existing investors, and it is a new exit channel for PE funds.

Characteristics of private equity secondary market;

First, for the transaction subject, the seller of PE secondary market transaction is LP or private equity fund, and the buyer is other investors. LP sells the investment shares of the partnership enterprises that have actually invested and the investment commitments that have not actually invested, while private equity funds sell their rights and interests in one or several invested enterprises.

Second, for the purpose of trading, for new investors, this kind of secondary market transaction certainly provides investors with a new investment opportunity, a way and bridge that may obtain a lower price to buy a higher investment value; For the seller, the secondary market enables him to realize his share of capital contribution or the rights and interests of the invested enterprise, so that the capital in a fixed state can flow, which can not only solve the urgent needs of the seller, but also reinvest the realized cash in investment products with more value-added potential after realizing this part of capital; In addition, because the secondary market of private placement belongs to multi-transaction market, which can be resold, the secondary market also provides a trading place for buyers and sellers to buy low and sell high to obtain speculative opportunities.

Thirdly, for the transaction object, LP sells its capital contribution share or partner's rights and interests in a limited partnership enterprise, and the transaction process is mainly designed according to the Partnership Enterprise Law and other laws and regulations, while the fund sells its rights and interests in the invested enterprise, that is, the equity of a limited liability company or a joint stock limited company, and the transaction process is mainly designed according to the Company Law and the Securities Law and other laws and regulations.

Fourth, for the privacy of transactions, more emphasis is placed on confidentiality and non-disclosure. Although the primary market of private placement also emphasizes "private placement", that is, non-disclosure and non-public participation, the primary market of other financial products often has the characteristics of non-disclosure and non-public participation, such as the primary market of stocks.

However, for the secondary market, unlike the openness and public participation of the secondary market such as stocks, the private secondary market is generally conducted in private, emphasizing the confidentiality and non-openness of transactions. This is not only because private secondary market transactions are indirect transactions involving public interests and need not be disclosed to the public; Moreover, because the secondary market transaction itself often indicates that the seller LP or the fund may have certain financial crisis or other unexpected events, the secondary market transaction itself may have certain negative or adverse effects on its reputation or image.