Lou Jiwei Sees Ponzi Finance in Private Equity

Sina: 楼继伟:投资领域应采取盯市制度,防范“庞氏骗局”出现
First, there is a large number of Ponzi financing and Ponzi investment phenomena in the primary market. In the mature private equity market, a general partner (GP) manages only one fund in phases according to its own strengths and strengths in the same industry (information technology, biomedicine, etc.) or at the same stage (angel, venture capital or merger). The territory is highlighted by the fact that a GP manages multiple private equity funds of the same type. It is likely to reverse the project among various funds, manipulate the performance, and undertake the poor quality projects of the old funds through continuous new funds. Ponzi financing is supported by Ponzi's investment. For various reasons, the relationship between the general partner (GP) and the limited partner (LP) is abnormal and lacks trust. For example, LP requires a large proportion of fund shares, and has the veto power of investment projects, or turn GP into a project source team that seeks investment opportunities. The board of directors checks all levels and does not invest in similar private equity funds. The funds invested are head funds in the market. However, through extensive contacts with market institutions, it has been found that many institutions in the market have a tendency to have the above problems. The Council uses its unique market position and always emphasizes the constant standardization of the professionalism and focus of the GP team. Taking into account the particularity of the domestic market environment and stage, the Board appropriately relaxes the relevant requirements compared with the mature market, allowing GP to manage different styles and industries while fully segregating and sharing only the legal, IT and financial backgrounds. And a single fund at the stage, but with strict restrictions on the cross-cutting of each type of fund.

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