Private Fund

Private Fund
Chinese "private fund" in some foreign countries Code and English Dictionary contains no corresponding word.

Private (private placement) relative to the Public Offering (public offering), is the issuance of securities on the method of difference, and whether or not specific to the community public issue or not issue public securities distinction, defined as a Public Offering and private, or private equity securities and Public Offering . Fund (fund), as a collection of investment management expert system, in foreign countries, from different perspectives classification, dozens of fund name, such as by organizational forms division, the lease funds, corporate funds set up by means of , a closed fund, and the open funds, according to investment division, equity funds, money market funds, options funds, real estate funds, etc.; another division from the other perspective, growth funds, offshore funds, an umbrella fund , funds and so on. But search of these funds name of the "private" and "the Fund" one of the official documents for the "private fund" (privately offered fund) English word is not found.

In China recently, the financial markets often said that the "private fund" or "underground Fund," often refers to in relation to the supervision of the competent government departments, not specific to the person who publicly issued investment certificates benefit from the securities investment fund, is a non - publicized, the specific private investors to raise funds for investment in a pool. There are two basic way, commissioned by the First signed investment contracts based on the contractual set of investment funds, and the second is based on the establishment of joint venture shares of the Company shares set of investment funds.

First, private equity fund through private fund-raising. Secondly, in the collection object, the object of private equity fund only a small number of specific investors, a small circle is not low threshold. Third, and the Public Offering strict information disclosure requirements are different, private equity fund these demands much lower, and the government regulation were also more relaxed, private equity funds, the investment of more subtle, more flexible operation, the corresponding high income opportunities for greater returns.


What is a private fund?

The so-called private equity fund, is through non-public way, and the small number of institutional investors and raise funds to set up the fund. As private equity fund sales and redemption through private fund managers and investors to carry out consultations, and it was therefore called to the specific targets to raise funds.


And the closure of the Fund, an open-end fund, and other funds Public Offering compared private equity fund has very distinct characteristics, it is precisely these characteristics with the Public Offering unmatched advantages.


First, private equity fund through private fund-raising. In the United States, mutual funds and pension funds, and so on Public Offering Fund, the general public through media advertising to attract customers, and according to relevant regulations, private funds are not allowed to use any media advertising, which was attended mainly by the so-called "investment reliable sources ", or direct knowledge in the form of fund managers to join.


Secondly, in the collection object, the object of private equity fund only a small number of specific investors, a small circle is not low threshold. In the United States, the participants hedge funds have very strict requirements: If personal capacity, the last two years at least in the personal income 200,000 US dollars more than if the family name to participate in family income over the past two years at least 30 million dollars more than if the name participate in the institutions, at least in its net assets of more than 1 million US dollars, but the number of participants also have the corresponding restrictions. Therefore, the private equity fund targeting strong investment objectives, it's more for the middle class investors tailored investment services products.


Third, and the Public Offering strict information disclosure requirements are different, private equity fund these demands much lower, and the government regulation were also more relaxed, private equity funds, the investment of more subtle, more flexible operation, the corresponding high income opportunities for greater returns.


In addition, the private equity fund a notable characteristic is the sponsor, the manager must take its own investment fund management company, the operation of the Fund and the success or otherwise of their own interests closely related. At present from the international common practice, the fund managers have to hold the general fund of 3% - 5% of the shares in the event of a loss, managers owned shares will be the first to be used to pay the participants, therefore, the sponsor of Private Fund , the manager of the Fund is a close, and sharing weal and woe the interests of the Community, to a certain extent, can solve the inherent Public Offering Fund managers weakening interest restraints, such as lack of incentive mechanism defects.


Public Offering (Public offering), which is openly raising. Open the meaning is twofold: First, to advertise, to understand and do not know all the people raising. The second is to raise the number of objects more, for example, generally defined as 200 or more.

Private Placement (Private Placement), which is private placement or private placements. As private means: First, not advertising. Secondly, only to the specific object placement. The so-called specific targets have two meanings, first, that the other side has some relatively wealthy risk control ability, and the second is that the other party is a specific industry or specific categories of people or institutions. Third, the private placement of general relatively small number of objects, for example, 200 people following.

In China, usually, the private equity fund (Privately Offered Fund) is a means of a few private investors (closed) to raise funds and the establishment and operation of investment funds.
Private Fund's advantages:

1. More targeted products. The private equity fund is to raise a small number of specific targets, and therefore their investment objectives more focused, more likely to customers tailor-made investment services products, the risk portfolio to meet customer receipts of special investment requirements.
2. Style of the more easily. As private equity fund higher threshold for the entry of major investors in the face of a more rational, similar to the relationship between the two partners, the Fund's management made less by the open-end fund as the troubled at redemption. Only fund managers like Warren Buffett, as the concept of giving full play to their own advantages to obtain long-term stability of excess profits. (Source: Network Fund entry: http://www.jijinjingzhi8.cn)
3. A higher rate of return. This is the vitality of private funds, and is also beyond the common fund. As fund managers dutifully more consistent, better space Practice investment philosophy, but not as regularly as the Public Offering detailed disclosure of the investment portfolio, but a higher rate of return on investments.
It is precisely because of these characteristics, private equity fund in the international financial markets occupy an important position, but also nurtured like George Soros, Warren Buffett's investment this Masters.

This shows the characteristics of private equity funds:

First, private equity fund is a special kind of investment funds, mainly in relation to the case of the Fund Public Offering;

Second, the private equity fund is generally in the "coterie," (only for specific minority investors) to raise funds;

Third, the private equity fund sales, and withdrawal of operation of private consultations with the private sector and rely on the confidence between the characteristics;

Fourth, the private equity fund investments are usually higher starting point, whether natural or legal persons and other organizations are generally required to have specific scale property;

Fifth, private funds should not be used to open the general media advertising, that is not open to attract and attract investors;

Sixth, private funds sponsors, fund managers will normally to its own funds for investment, thus interests tied, sharing risks, and benefit-sharing mechanisms;

Seventh, the private equity fund relatively relaxed regulatory environment, namely, the Government does not usually its strict control;

Eighth, the private equity fund of information disclosure requirements do not strictly;

Ninth, private equity fund higher degree of confidentiality;

10, private equity fund more rapid response, a very flexible space to operate;

11, private equity fund relatively high return on investment (that is, the probability of high-yield relatively large);

12, other.