This week, four A-share listed companies Universal Scientific Industrial(Shanghai)Co.Ltd(601231) , Maxscend Microelectronics Company Limited(300782) , Sg Micro Corp(300661) , Unittec Co.Ltd(000925) successively announced that they had invested 30 million yuan, 50 million yuan, 30 million yuan and 40 million yuan respectively to subscribe for the limited partnership shares of the 1.5 billion yuan new phase of RMB fund initiated by Yaotu capital. In early December, Gemdale Corporation(600383) also announced that the board of directors agreed that the company, as a limited partner, invested 30 million yuan with its own funds to subscribe for the shares of Hangzhou Qiming Rongjing equity investment partnership (limited partnership). At present, the subject fund has been filed with China Securities Investment Fund Association and obtained the Filing Certificate of private investment fund.
Since this year, the enthusiasm of listed companies to participate in the subscription of private equity funds has greatly increased. Through the main body of listed companies or its companies, they have concentrated on “sweeping goods” in the primary market, which has attracted great attention of the market. GP (general partner) including IDG capital, Qiming venture capital, Jiayu fund, Qiancheng capital, Yaotu capital and CCB international have received funds injected from listed companies. Not only that, more and more listed companies have also personally ended up investing through CVC (enterprise venture capital fund) fund, with the intention of seeking new breakthroughs in industrial investment and transformation.
listed companies flock into the private equity market
According to the incomplete statistics of the Securities Times reporter, since December alone, more than 30 companies have announced to participate in the subscription of different types of equity private equity funds. It is conservatively estimated that at least 100 companies have joined the army of “scavenging” private equity funds throughout the year. From the announced categories, it can be found that most listed companies participate in the subscription of less than 50 million yuan, and the investment direction mostly focuses on the upstream and downstream of the company’s main business; From the perspective of the investment direction of the fund, new technologies, new energy, medical industry, consumption upgrading and other categories are relatively popular fields; From the perspective of the type of GP selected by A-share listed companies, there are RMB funds and US dollar funds. The capital contribution is mainly in RMB, but some are subscribed by holding overseas companies.
For example, in the announcement released today, it is pointed out that China Youran dairy holding limited, an overseas wholly-owned subsidiary, signed two investment agreements on December 22, 2021. As a limited partner, China Youran subscribed for Community Fund LP fund shares with its own funds, with a subscribed capital contribution of US $42 million.
Through consulting the announcement, the reporter of the Securities Times found that community Fund LP was established in the form of Cayman exempted limited partnership and was established on August 17, 2021. Community GP Limited is the general partner of Community Fund LP. Its actual controller is Dai Qiang, senior manager of IDG capital. It mainly invests in excellent sub funds in relevant fields such as new technology and consumption upgrading. As early as October this year, Byd Company Limited(002594) has announced that it plans to subscribe $300 million to Community Fund LP through its holding subsidiary Golden Link worldwide Limited (hereinafter referred to as “Golden Link”) as a limited partner.
This means that Inner Mongolia Yili Industrial Group Co.Ltd(600887) and Byd Company Limited(002594) jointly invested heavily in IDG’s US dollar fund and became the US dollar LP (limited partner) of IDG capital. The investment goal is directed to areas such as science and technology and medical innovation.
The same listed company may have more than one type of Equity Fund. The reporter of the securities times learned that many popular industry leaders such as Contemporary Amperex Technology Co.Limited(300750) have a wide range of coverage, and binding multiple GP is also a common choice. Suzhou China-Singapore Suzhou Industrial Park Development Group Co.Ltd(601512) , which is funded by a number of private equity investment institutions in Shenzhen, is also a typical example. The reporter of the Securities Times found that China-Singapore Suzhou Industrial Park Development Group Co.Ltd(601512) has invested in a number of private equity investment funds, including Tongchuang Weiye, Qiancheng capital, Hushan capital, source capital, Yuanyi capital, Jianqiao capital and Yuanhe Puhua, most of which are registered in Suzhou.
In addition, some companies have completed the targeted equity acquisition through the joint establishment of new funds to specifically invest in projects upstream and downstream of the industrial chain.
Zhang Qingchun, partner of PCCW capital and President of the strategic operation center, told the securities times that the investment target of the special acquisition fund is relatively clear, and the investment target is usually locked. The target company and the listed company have business collaboration and intention of follow-up in-depth cooperation. Therefore, the proportion of capital contribution of Listed Companies in the special acquisition fund is usually high, More attention will be paid to the depth of post investment management and resource coordination of participating target enterprises; In terms of future investment exit, the acquisition of the underlying enterprise equity held by the special fund by listed companies is an important path for the exit of the special fund.
“in addition to the appreciation of its own capital assets, the equity funds invested by listed companies are mainly based on their own transformation needs and product extension needs, as well as factors such as stabilizing the supply chain and increasing customer sources.” Wang Lei, managing partner of Huada win-win industrial fund, said, “more and more industrial capital entering the equity investment fund industry is a good sign, which is conducive to the clear trend of China’s industrial upgrading and transformation.”
Xiong Wei, chairman of Qiancheng capital, also holds the same view. According to his observation, behind the phenomenon of listed companies investing in funds, there are mainly demands for business cooperation, hoping to obtain financial + business coordination. In terms of the industrial science and technology field he is concerned about, there are many investors in the supply chain, not only hoping to obtain valuable suppliers through investment funds, It can also benefit from the listing of suppliers.
he also stressed that there are two directions for listed companies to make private equity investment. First, in order to strengthen their main business and expand new business directions; Second, obtain investment income as a pure investor. However, if cross-border and over reliance on equity investment, simply for the purpose of obtaining financial income, it is not different from financial investors, and may affect the main business in the long run.
CVC becomes the second growth curve of listed companies
With the implementation of the registration system, the main body of China’s listed companies has increased rapidly. As of December 23, the number of A-share listed companies has reached 4672, and there are many Internet companies in China concept shares and Hong Kong shares. Moreover, the strength of industrial capital is gradually strengthened, resulting in the rapid development of CVC. Such as Wen’s investment, Haier capital, Shanshan venture capital, country garden venture capital, etc., are more active institutions in the market.
The latest CVC report released by it orange and Rongzhong research shows that in China, the main companies of major CVC investment institutions are mainly Internet companies. In 2021, 159 are Internet companies, accounting for 21%, ranking first in the list; Non internet organizations cover manufacturing, media, biomedicine, games, automobiles, real estate, entertainment and other industries. The most important ones are manufacturing, media, biopharmaceutical, games and software, accounting for 15%, 9%, 6%, 6% and 6% respectively.
Should practitioners of real enterprises get involved in VC (venture capital)? There are many discussions in the industry. Those who hold objections believe that this is a kind of “breaking away from reality into emptiness”, so they are not optimistic about the attempt of real enterprises in VC. Executives of listed companies believe that many industries are facing the challenge of transformation and upgrading because of their different industries. For entrepreneurs in the wave of upgrading, their stock market is shrinking, and the pressure of enterprise transformation and upgrading is very great. In this context, we might as well establish CVC by means of investment, connect ourselves with emerging development forces, and look forward to seeking the second growth curve of the company’s transformation.
Zhang Qingchun’s view is that the direct venture capital of listed companies, on the one hand, increases the vitality of the private equity market, on the other hand, provides more possibilities for the development of innovative enterprises and small and micro enterprises in their field, which is conducive to promoting the development of the industry and feeding the national economy as a whole.
Wang Lei believes that listed companies choose LP or direct investment, which is suitable for different investment methods at different stages. He pointed out that listed companies mainly focus on products, industrial companies focusing on R & D, production and sales, and the mode is relatively determined. In the initial stage, self owned capital investment focuses more on the industrial chain, such as looking at investment from the perspective of supply chain and customer stability; After development to a certain extent, there is a demand for product extension and even cross-border investment products; In the third stage, if the investment is relatively successful, after meeting the needs of the stable development of the main business, control the investment management company and gradually enter the mixed development mode of industry and investment. Equity investment management companies have fixed judgment logic for equity investment raising, investment management and withdrawal, which is different from the project based on investment from the industrial perspective.
(Securities Times)
