Discussion On PE Project Source Training Problem

The Private Equity Fund has been in China for less than thirty years, and has been regarded highly by the government since the beginning. It plays an important role in many levels, such as perfecting corporate management, promoting corporate innovation, transiting corporate financing structure and promoting the industry upgrade in China, especially with the launch of Growth Enterprises Market, the amount and the scale of the Private Equity Fund exceed any other time in the past in the aspect of financing, investment and logout. The author was interested in the investment of PE, and found the secret worries behind the prosperity of PE industry through reading the relevant cases and reports: the capital in Private Equity Fund is becoming more and more, the new PE institutions are becoming more and more, while the estimated value of the project with PE is becoming higher and higher, with the increasing supply from GEM, the market is becoming more and more mature and rational, the current usual high-priced issue in the secondary market should be unsustainable, now the PE which entered with high price striving for the projects will face high logout risk in the future. Facing with this kind of situation, how to make the PE industry develop healthily?There are many researches on PE in domestic and foreign countries, and they focused on the organizational structure, incentive and restricted mechanism and external supervision, etc., while researches based on case analysis mainly discuss the operation process of PE, and the researches on the PE project source issue are rare. The author is enlightened by the Jiuding Capital cooperated with trade associations based on the consideration on the status quo of PE industry, proposes his own opinion according to the basic train of thought "ask-analyze-solve" on cultivating project source to solve the project shortage issue of PE industry. The whole article is constituted by four chapters:Chapter One, ask the question:briefly review the development process of PE industry in China, point out that the development of the real economy is the foundation for the development of PE industry, and analyze the status quo of PE industry from the aspects of financing, investment, the amount and scale of logout, point out the existing project shortage issues.Chapter Two, analyze the problem:analyze the reasons caused the PE project shortage. Firstly, the reason comes from the PE itself, which is anxious to catch the GEM express train to obtain the achievement to prove its own abilities, in addition, some LP are immature, and the investment period is short, all these reasons caused the eager for quick success and instant benefit of PE, secondly, it comes from the project source, the integrated quality of the project sources (mainly small and medium-sized enterprises) are not high, part of the enterprise managers are wary of PE financing, thirdly, the government support are not enough, including the support to the development of small and middle-sized enterprises, the risk compensation on the early-stage projects of PE investment and so on. Analyze from the reason, point out the way to solve the problem, promote the development of small and medium-sized enterprises, and achieve the joint of PE and numerous small and medium-sized enterprises.Chapter Three:the idea reference of solving the problem:introduce the cooperation between Jiuding Capital and the trade association. Jiuding Capital founded less than four years ago, it develops rapidly, and there are many reasons of multiple aspects, the most important is its investment and research teams and business net. In its business net, the cooperation with trade association provides guarantee for the in-depth projects in the industry. The cooperation with trade association, and achieving the wide joint of PE and small and middle-sized enterprises, this kind of mode is a benefit reference to solve the project shortage of PE industry. Chapter Four:the idea expansion of solving the problem:based on the analysis of chapter two and the cases of chapter three, propose the thought of solving the PE project shortage issue:the government works on the basic cultivation of the development of small and medium-sized enterprises from the aspects of financing, taxes, management and techniques, extent the institution investor proportion of Private Equity Fund to cultivate mature limited partner market, perfect the risk compensation system on the early-stage projects of PE investment; the trade association plays the role of bridge and connection, strengthen the service work on the members of the association; the PE promotes the growth of outstanding small and middle-sized enterprises through value added services; and discuss the concrete measures combining the three together, based on the cooperation of PE and the association with the help of policy promotion, do emphasized cultivation on the outstanding enterprises, promote a comprehensive and multi-level PE project resource cultivation mode on the basis of promoting the development of small and middle-sized enterprises.As a MBA student, I only got a limited and superficial understanding on the theories, part of the article quoted the theory only to explain the issues or provide guidance for solving problems. The inadequate understanding on the theories plus the author is not working in the PE industry, so some of the proposed measures may inevitably be unrealistic. However, the comprehensive cultivation mode of the project source based on the elicitation of the cooperation between Jiuding Capital and trade association proposed by the author may still have a positive significance on solving the status quo of PE project shortage and implementing the policy of promoting the development of small and middle-sized enterprises by central and local governments.