1. Definition: "PE" means PrivateEquity, and private equity refers to an investment method of investing in unlisted equity or non-publicly traded equity of listed companies. From the perspective of investment methods, private equity investment refers to the equity investment in private enterprises, that is, unlisted enterprises. In the process of transaction implementation, the future exit mechanism is considered, that is, through listing, mergers and acquisitions or management buyback, the shares are sold for profit.

2. Features:

Private equity investment (PE) is also translated as "private equity investment" and "private equity investment". These different translations reflect the following characteristics of private equity investment to varying degrees:

First, in terms of fund raising, it is mainly raised by a few institutional investors or individuals in a private way, and its sales and redemption are carried out by fund managers through private consultations with investors. In addition, the investment method is also carried out in the form of private placement, which rarely involves the operation of the open market and generally does not need to disclose the details of the transaction.

Second, more equity investment is adopted, and debt investment is rarely involved. Therefore, PE investment institutions enjoy certain voting rights in the decision-making management of the invested enterprises. Reflected in investment instruments, common stock or transferable preferred stock and convertible bonds are commonly used.

Third, the equity investment in non-listed companies or the non-publicly traded equity of listed companies is regarded as long-term investment due to poor liquidity (generally up to 3 years or 15 years or longer), so investors will demand higher returns than those in the open market.

Fourth, there are many sources of funds, such as wealthy individuals, venture funds, leveraged buyout funds, strategic investors, pension funds, insurance companies and so on.

Fifth, there is no listed transaction, so there is no ready-made market for the transferor of a non-listed company to reach a transaction directly with the buyer. Investors who have money to invest and enterprises that need to invest must rely on personal relationships, industry associations or intermediaries to find each other.

Sixth, it is more inclined to the molding enterprises that have formed a certain scale and generated stable cash flow, which is obviously different from VC.

Seventh, there are three main ways of return on investment: public offering, sale or merger, and reorganization of company capital structure. For foreign-funded enterprises, private equity investment not only has the advantages of long investment cycle and increased capital, but also may bring professional skills needed by enterprises in management, technology and market. Compared with the volatile and unpredictable open market, private equity investment capital market is a more stable source of financing. In the process of introducing private equity investment, competitors can be kept secret, because information disclosure is limited to investors and does not have to be as public as listing.

Eighth, PE investment institutions mostly adopt limited partnership system, which has good investment management efficiency and avoids the disadvantages of repeated taxation.

Ninth, the investment exit channels are diversified, including IPO, TradeSale and M&A; A), the target company management repurchase, etc.