Convertible Bonds: A Supplementary Exit Path for Private Equity Funds

Abstract

With the rapid development of China's economy, private equity funds have become an important force to help unlisted small and medium-sized startups quickly become bigger and stronger. As an important financing channel for enterprises, private equity funds can provide a large amount of financial support for target enterprises, and in all aspects of their investment operations, the choice of exit method is particularly important as the core link that directly affects returns. Therefore, this paper takes the case study as the research method, and selects SoftBank Group's gradual reduction of Alibaba shares through the issuance of convertible trust bonds as a case study, and studies the use of convertible bonds as a supplement to the IPO exit method of private equity funds. The study finds that convertible bonds, as a supplement to the IPO exit method, have more efficient, lower risk and low cost financing capabilities, effectively solve the problem of single exit path, improve the speed of private equity fund exit liquidation, and reduce the loss range while retaining the profit growth space.