GUANGZHOU (Fund China) - In the banking credit crunch, corporate finance increasingly difficult situation, through the development of private equity funds, venture capital and venture capital for SMEs (Small and Medium enterprises), including diversified financing channels are becoming the industry consensus.

According to statistics, as of the end of December 2006, China and the foreign private equity funds of 129 mainland and mainland-related enterprises have investment in the private equity investment to 75 the number of institutions, with a total investment reached 12.973 billion US dollars.

With equity financing and bank loans than private equity investment more suitable for SMEs, as a financing and the average size restrictions on the qualifications of enterprises relatively low. Inspection and bank loans to enterprises such as asset size compared to private equity investment fund investment principles and preferences are essentially different. The company’s core competitiveness, growth of private investment is the greatest concern of inspection points. In addition, the project company’s business model, competitive barriers and so on, private equity funds are also an important element of concern.

Through the development of private equity funds raise the proportion of direct financing is an effective means. Private equity funds can be divided into two parts. The main focus is the last before the second half of the industrial chain that is voted on the wind, venture capital and so on, the current focus of development should be managed by the experts into the growth-oriented enterprises listed in the fund. He proposed a private equity fund of three models: One is led by the government-industry fund leases, such as Tianjin Bohai Industry Fund; Second, the system of private partner of the Fund; Third, it is a trust company, that is to raise funds through the trust company.

While the industry generally felt that the introduction of private equity funds to the enterprises, the private equity investment financing is not only a long period, the additional capital and other benefits, but also can bring enterprise management, technology, market and other enterprises urgently needed by the professional skills and experience.

Copyright Fund China 2008.

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