Extended data:
Equity investment usually needs to go through several years of investment cycle, and because it is invested in developing or growing enterprises, the development risk of the invested enterprises themselves is very high. If the invested enterprise ends in bankruptcy, the private equity fund may lose all its money.
Private equity investment not only injects capital into the target enterprise, but also injects advanced management experience and various value-added services, which is also a key factor to attract enterprises.
While meeting the financing needs of enterprises, private equity investment funds can help enterprises improve their management ability, 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. All-round value-added services are the highlight and competitiveness of private equity investment funds.
In China's financial market, "private fund" or "underground fund" is usually a collective investment that is privately raised by specific investors, as opposed to the securities investment fund that is supervised by the competent department of China government and publicly issues beneficiary certificates to unspecified investors.
First, the risk of opaque information.
Because private equity funds do not have strict information disclosure requirements, information opacity is the biggest risk of private equity funds. Investment planning, fund allocation, project tracking management and all other processes involving investment operation management may have insufficient information disclosure.
Second, investors' ability to resist risks is low.
The reason why many investors participate in private equity investment is to value the high returns of private equity funds, but high returns also correspond to high risks. Many investors do not have the corresponding ability to resist risks, so investment should focus on the risks of such private equity funds.
Third, the ability of fund managers is uneven.
Due to the lack of strict industry access standards, there are obvious differences in fund managers' management ability, industry status and market recognition. In the same market environment, some fund managers can bring benefits to investors with accurate investment, while some fund managers may cause losses to investors.