When the enterprise is burdened with high debts and insolvent, the original creditor's rights and debts of banks and enterprises can be converted into equity and property rights through debt-to-equity swap. What are the ways for private equity funds to participate in debt-to-equity swap? 1. Setting up an asset management company Private equity funds can participate in setting up an asset management company and directly participate in debt-to-equity swaps through the asset management company. 2. As the investor of the debt-to-equity swap fund, when large enterprises implement debt-to-equity swap, due to the huge amount of money needed to purchase creditor's rights, the implementing agencies often adopt the method of "subsidiaries set up funds", and private equity funds can participate in the fund as investors and get a return on investment. 3. As a manager, a private fund manager who initiated the establishment of a fund and registered with China Securities Fund Association may initiate the establishment of a raised private fund and manage the assets invested by it. 4. Private equity institutions entrusted with the management of debt-to-equity swap assets can give full play to their own advantages and provide supporting services for asset management companies in the form of asset securitization. By initiating the management of non-performing assets funds, the equity of the converted asset management company will be packaged, received and managed, and then withdrawn, earning management fees and transfer income. 5. After the equity asset management company transferred by the transferee implements the debt-to-equity swap, the exit methods of the equity include IPO, listing on the New Third Board, merger and acquisition or direct transfer to other purchasers. 6. Providing consulting services for the debt-to-equity swap implementation plan In the process of debt-to-equity swap implementation, private equity institutions can participate in coordinating the relationship among multiple creditors of the enterprise as an independent third-party platform, so as to keep the status of all creditors consistent. You can also rely on your own experience in the disposal of non-performing assets and rich investment experience in the field of "raising investment and managing exit" to provide banks with a disposal plan for non-performing assets and design a debt-to-equity swap plan to attract the participation of social capital and improve the success rate of debt-to-equity swap. Legal provisions: Article 5 of the Measures for the Administration of Financial Asset Investment Companies encourages optimizing the ownership structure of enterprises through debt-to-equity swap, capital write-down by original shareholders and introduction of new shareholders. Support financial asset investment companies to promote enterprise restructuring, effectively exercise shareholder rights, fulfill shareholder obligations, and improve corporate governance.

Legal objectivity:

Interim Measures for the Supervision and Administration of Private Investment Funds Article 2 The term private investment funds as mentioned in these Measures (hereinafter referred to as private investment funds) refers to the investment funds raised from investors through private placement within the territory of People's Republic of China (PRC). The investment of private equity fund property includes buying and selling stocks, equity, bonds, futures, options, fund shares and other investment targets agreed in investment contracts. These Measures shall apply to the registration, fund raising and investment operation of companies or partnerships established for the purpose of investing in private equity funds and assets managed by fund managers or general partners. Article 3 of the Interim Measures for the Supervision and Administration of Private Investment Funds shall follow the principles of voluntariness, fairness, honesty and credibility, safeguard the legitimate rights and interests of investors, and shall not harm the national interests and social public interests.