The Research Of Correlation Of Private Equity And First-day Performance Of Ipo In Chinext

ChiNext (also known as the Growth Enterprise Market) launched inlate October,2009in Shenzhen Stock Exchange of China. It is good newsfor local private equity firms as it provides an additional exit strategy fortheir investments. Meanwhile, private equity firms started to get morepublic attention due to the fact that more and more companies listed inChiNext were invested by private equity firms. This thesis is aiming atanalyzing the correlation between private equity investment and ChiNextIPO first day performance and examining whether value of private equityinvolvement is recognized by investors in ChiNext. First, the basicconcepts and internal operation process of private equity fund areintroduced; Second, the potential benefits of private equity investment tothe companies are presented; Third, regression analysis is performed forcompanies listed in ChiNext between2009-10-30and2010-10-30, Ifound that private equity investment involvement and IPO performanceare not correlated. There are two possibnle explanations, one is thatChinese Capital market is immature, the other one is private equityinvestment is still young in China. Finally, three recommendations areprovided:1. To improve the investment style, trying to focus on earlystage investment;2. To strengthen the post-investment management,helping the company grow;3. To educate the market about the value ofprivate equity for the company.