Trust system is a fund (trust plan) formed by a trust enterprise that collects the funds invested by customers from multiple trusts and directly or entrusts other institutions to implement PE investment.
Advantages and disadvantages of trust model The advantages of this model are as follows: First, raising funds through trust channels can effectively enlarge the amount of PE business funds and help to quickly concentrate a large amount of funds needed for PE business investment. As an operating trust institution, the fundamental value of trust enterprises lies in their ability to transform extensive social funds into investment capital needed for social progress and economic construction through specific rules (trust system) and carriers (specific trust business forms).
Secondly, under the current institutional framework, trust products are standard financial products. Not only the custody function of trust property is exclusively managed by banks, but also the entrusted operation and management of trust enterprises must be carried out in strict accordance with the norms of laws and regulations and subject to the supervision and management of the CBRC. This feature is in sharp contrast with the shortcomings of the partnership model.
Thirdly, the new management methods of trust enterprises and fund trusts have repositioned the business of trust enterprises. Private equity investment trust is a kind of non-debt financing trust that conforms to the new management mode of trust enterprises. It not only conforms to the functional orientation of trust industry, but also embodies the advantages of trust system, giving full play to the business characteristics of trust enterprises with wide business fields and flexible means, and will inevitably become the key business field of trust enterprises.
Disadvantages: Trust funds are often raised at one time, but PE business needs to invest in stages according to the investment situation of each specific project, and the funds raised by trust may be temporarily idle.
From abroad, PE business can be carried out in various modes, such as investment enterprise system, limited partnership system and trust system.
In fact, there are only three feasible enterprise system models for PE in China: partnership system, enterprise system and trust system.
At present, it is more advantageous to develop PE in trust mode in China, and it is more operable to use trust mode as the organizational carrier of PE, and the existing laws and regulations are complete. Trust enterprises should choose which mode to participate in and carry out PE business according to their own specific conditions, market environment and legal environment in practice.