Research On Organizing Mechanism Of Private Equity Funds

Private equity as a form of financing has been developing dramatically in the global capital market. Private equity fund which is the carrier of private equity performs as a financial bridge between investors and borrowers, ant it is also the best way access to finance and the advanced management. So we must make a bigger effort to develop private equity fund. And the most important thing of the development of private equity fund is to choose the proper organizing mechanism.The first part of this paper introduces an analysis on private equity fund theory and organizing mechanism theory. On the basis of these theories, the Principal-Agent problem exists in private equity fund. The organizing mechanism was introduced to solve the principal-agent problem. The second part of the paper is to analysis three kinds of private equity fund mechanism by the means of comparative analysis. The third part is to analysis the legal and market environment in China and the problem of implementing the three types of private equity fund. The last part to introduce the emerging trusteeship in China, and conclude the advantage of developing trusteeship private equity fund.Because of the uniqueness of the legal and market environment, this paper concludes that the mature mechanism of corporation private equity fund, indenture private equity fund, and limited partnership system private equity fund, is hard to exert their strength in China. The trusteeship private equity fund has comparative advantage in China. In practice, for the better development of private equity fund, the best model is the trusteeship combined with limited partnership.