Research On The Preference Of Institutional Investors Participated In Private Placement

Private placement is a refinancing way for corpations which issue shares to eligible investors.Because the private placement has the advantages of strong operability,convenient implementation and low cost,it has developed into the main way of equity refinancing.The total fund-raising of private placement market is far more than IPO and other refinancing methods.At the same time there are phenomenonm like over-financing,“concept hype”,short-term arbitrage and blind cross-border.On the 17 th February of 2017,the regulatory authorities modifed the relevant regulation,which made the private placement market into a new period.Regulators encouraged institutional investors to develop becausethey are given the role of protecting the interests of small and medium investors.However,the research of the role which the institutional investors played did not form a conclusion.Morover,what is the effect which the institutional investors bringed in private placement market?In view of this,this paper will focus on two pespects.The first one is the motivation of institutional investors when they participated in a private placement.The other is what is the the impact of the company's value bringed by the institutional investors.This paper first reviews the literature,combs the background of China's private placement and finish the theoretical analysis.The paper selected A-share listed companies which successfully finished private placement from 2006 to 2014 as the empirical sample.The paper used the literature research method and the empirical research method to systematically analyze the institutional investors' role in private placement.The study found that:(1)Institutional investors in the participation of private placement had strong speculative properties,which was reflected in the condition that the institutional investors are more concerned about the participation rate of discount,and not concerned about the growth of corporate value;(2)Institutional investors tend to participate in private placement that does not involve the transfer of shareholders' interests;(3)Institutional investors are preferred for industry prospects and subject attentions,but the relationship are not significant;(4)There are significant differences between the professional institutional investors represented by the fund and the normal institutional investors.Generally,the normal institutional investors prefer to participate in the programs with asset subscription and without the purpose of project financing.The professional institutional investors tend to be investors who focus on value.