Time-Based Research On The Investment Process Of Private Equity Funds

Financial crisis did not block China’s private equity investment industry stepping forward.The industy’s extraordinary pace of development surpassed our imagination, whether foreign private equity fund,such as Sequoia,Saif,and local fund,such as CDH,Shenzhen Fortune,or state-owned venture capital or equity funds,such as CITIC,the fund-raising and investment efficiency has greatly improved than before.But we should also see,China’s private equity investment industry is still in the initial stage of development. In addition to many institutional and policy issues that need to be resolved.our investment mechanism itself lacks scientific concept,investment process always reflects some subjective judgments.Trend following of investment,and heating phenomenon are very obvious.Investment process of private equity fund can be divided into four stages:the value discovering stage.the value transaction stage,the value holding stage,and the value realizing stage.The four stages are connected, and they move in circles.The time factors are reflected in all the aspects of investment process. Taking the time as the research angle of view on investment process of private equity fund is a systematic engineering.The conclusions of individually studying on any stage of the investment process will lack the realistic guiding significance.This paper focuses on the time factor,and systematicly study the PE investment process,in order to provide a new research thought to the later learning,at the same time.this paper hopes to provide some guidance for investment practice.This paper adopted normative methods,combined with empirical methods to study the time fators in the course of private equity investment process.The full text is divided into six chapters.The first chapter was introduction,it introduced the research background,definition,and the four stages of PE investment process,then summed up the domestic and international related literature review of PE investment process;The second chapter mainly introduced our country’s development course of the PE industry and its unique characteristics at present form which we can see many considerable progress,conbined with some observable problems;The third chapter began to study value discovering stage and value transaction stage.Due to the time characteristic shown at this stage is not obvious, so this’content was relatively simple, only through the deductive way to summarize the common factors that need to be considered before PE make their investment decision;Then this chapter introduced the meaning of value to PE,and summarized the main evaluation method at present,created an investment probability value pricing method.At last, this chapter studied the time characteristics of PE investment cost from an objective point of view through empirical analysis, the results sayed:China’s private equity fund showed Pre-IPO features, investment cost showed two ups and downs relative to the investment time;The forth chapter studied the value holding stage,.This chapter first summarized the main types of intangible assets provided by PE to the invested units.Then it used two investment return indexes as starting point,made a significant test for the mean differences of investment return of different holding periods.The results sayed,short-term holding period did not contribute to increase investment return, in order to increase investment return significantly, PE institution should extend cultivation time for invested units as long as possible.The fifth chapter studied the value realizing stage.This chapter first introduced general principles of PE exit decisions,then,it used IPO channels as the background,constructed a PE exit time decision model with few hypothesis and popular derivation process.The sixth chapter are the ending.This chapter first summarized the research conclusion expressrd above,then pointed out the direction of future research.