As Chinese families become more prosperous, the market for public equity funds will likely grow and become a bigger market in the years to come. According to Dong Dengxin, director of Wuhan University of Science and Technology’s Finance and Securities Institute, the market is expected to expand more in the near future due to the rising wealth of the country’s young people. Furthermore, according to Li Daxiao, chief economist of Yingda Securities, China’s public equity fund sector is experiencing a significant growth in the number of investors.
Private Investment in Public Equity, or PIPE, is a method of raising capital for micro and small-cap issuers. The primary advantage of this method is that it limits the potential for one investor to gain more than other investors. PE firms can invest in companies through a variety of methods, including mergers, acquisitions, and venture capital. The terms of these investments may differ slightly, but generally, they are based on a set of contractual terms.
Besides raising capital, private equity funds also have a range of services, such as registration, asset management, and IT system development. Unlike public equity funds, however, private equity funds are not subject to the same regulation as public equity funds. Therefore, it is important to select a private equity fund service provider carefully. A reputable company will have a paid-in capital of at least RMB 50 million, a standardized operation, and a certified staff.