Why has become the mainstream of the limited partnership private equity investment fund?

Limited partnership is a special partnership, development in practice greatly stimulated the private equity investment fund.

A limited partnership to fund investors and managers are regarded as partners, but the funds investors are limited partners Fund (LP), while the fund manager is a general partner of the Fund (GP). Limited partnership enterprise except in the tax system to avoid double taxation, is the main distribution system to design a set of sophisticated "same shares with different rights", solve pay harmony and output, greatly promoted the development of fund.

In a typical limited partnership funds, investment and allocation arrangements are as follows:

LP promises to provide fund 98% of the investment amount, it will also have a minimum income guarantee (minimum capital expected rate of return, is generally more than 6%), the rate of return of the fund returns, LP has the right to receive one of the 80%. LP does not intervene to fund any investment decision.

GP promises to provide fund 2% of the investment amount, at the same time, GP charge an annual fund certain asset management fee, generally is 2% the size of the assets under management. The standard rate of income fund the minimum capital, GP won 20% of the fund return. Fund the daily operations of the staff wages, rent and travel expenses are resolved in 2% asset management fees. GP has the exclusive right of decision for investment projects, but should progress regularly reports to the LP investment.

Although the Chinese government departments of the domestic but also to the development of the limited partnership fund have different opinions, but the current opinion is the same:

Funds can choose the company system or contract operation, but the limited partnership is the main direction of the development fund.