Generally speaking, the industry refers to the way a company raises funds by selling shares as equity financing. Through this financing method, the company does not need to repay the principal and interest after raising funds, but it needs shareholders to share profits and bear losses. Equity financing can also be further subdivided into four financing methods: equity pledge, equity transfer, equity capital increase and share expansion, and equity private placement.

◆ Equity pledge

The debtor transfers his property or power to the creditor as security, and the act of lending money to the creditor is a pledge. In equity pledge, the shareholder pledges his or her equity in order to obtain funds, and it should be noted that the shareholder only surrenders the power related to property rights in the equity, and does not hand over other rights such as participating in decision-making and selecting managers. Therefore, the pledgee in the equity pledge cannot be regarded as obtaining all the rights of the shareholders, but only obtains the property rights in the equity.

◆ Equity transfer

Unlike equity pledge, which only transfers the power related to property rights, equity transfer refers to the transfer of all rights and interests of shares by the shareholders of an enterprise to others, which is actually a change in property rights. After the equity transfer, the shareholders of the enterprise change, and the person who accepts the transfer becomes the new shareholder of the enterprise. Equity transfer is a relatively common financing method, which can improve the liquidity of equity to a certain extent and enhance the efficiency and vitality of enterprise operations. In addition, the equity transfer requires an agreement between the transferor and the transferee, and in order to safeguard the legitimate rights and interests of both parties, the transfer should be carried out by agreement.

◆ Equity capital increase and share expansion

As the name suggests, equity capital increase and share expansion is an enterprise to increase funds by adjusting shares, and the main ways to achieve this include issuing shares, raising shares from the society, attracting investment from new shareholders and expanding equity by original shareholders. Unlike the above two financing methods, the focus of this financing method is on "increase" rather than "transfer", and the beneficiary of the funds is the enterprise. By expanding investment, enterprises can raise more operating capital, which is conducive to the development and growth of enterprises. However, although the expansion of equity and the increase of registered capital are conducive to the development of enterprises, enterprises should also formulate a sound business plan so that shareholders can obtain stable returns and achieve long-term development.

◆ Private equity placement

Private equity placement is a targeted introduction of new shareholders financing method, the number of new shareholders is often less than 200, the stock will not be publicly issued, enterprises through equity transfer, capital increase and share expansion and other ways to obtain funds.

Under the right conditions, equity private financing is an effective financing method, and many enterprises in China have achieved good development in this way. For example, the industry-leading SF Express, the first equity financing after its establishment 20 years ago was a private equity investment, and it received a joint investment of 8 billion yuan from China Merchants Group, CITIC Capital, Oriza Holdings, and Guyu Capital. Today, SF Express is still showing a good development trend, and its operating income and profit margin are among the best in the industry. A large part of the reason for SF's success is that it has a clear equity structure, a simple debt-creditor relationship, and is favored by funds and investment companies, so as to obtain stable financial support, which is the positive impact of equity private financing.