most of the listed companies that can be split and listed are not short of money, but hope to introduce valuable investment for the development of the companies to be split
venture capital’s investment in the proposed IPO project of the subsidiary of the listed company can be withdrawn by the listed company’s repurchase of the shares of the subsidiary in addition to IPO
Recently, Guangzhou Automobile Group Co.Ltd(601238) disclosed that gac-e’an implemented employee equity incentive by means of capital increase through non-public agreement, and simultaneously introduced Chengtong Group, Nanwang kinetic energy and Guangzhou AIAN as strategic investors, completing a total financing of 2.566 billion yuan. In the future, gac-e’an will further introduce strategic investors and actively seek an appropriate time to go public.
“Leading the war for the son” seems to be the prelude to more and more A-share companies “sending the son to fly alone”. According to the information statistics of Shanghai Securities News, since June 2021, more than 20 A-share companies have planned to “send their children to fly alone” in the form of spin off listing, of which Jiangxi Copper Company Limited(600362) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) , Saic Motor Corporation Limited(600104) , Hubei Xingfa Chemicals Group Co.Ltd(600141) , Iflytek Co.Ltd(002230) , etc. have increased their capital within half a year before and after the disclosure of the listing of spin off subsidiaries. The same is true for the previous Byd Company Limited(002594) , Qingdao Tgood Electric Co.Ltd(300001) , Dian Diagnostics Group Co.Ltd(300244) , Chongqing Zongshen Power Machinery Co.Ltd(001696) , etc.
“The subsidiary to be split itself, as a new upstart in emerging industries or new technology applications, needs to introduce war investment to solve the capital problem.” Wang Jiyue said that most people who want to invest in the listed companies in Shanghai are not short of money, but do not want to split the listed companies
The staff of the research department of a securities company also believes that: “the introduction of war investment is conducive to the improvement of the structure of the proposed spin off subsidiary. Later, if you log in to the capital market with high valuation level such as the science and innovation board, it is expected to raise more funds.” According to the information statistics of Shanghai Securities News, since the opening of the A-share spin off policy in December 2019, more than 100 A-share companies have disclosed and promoted the spin off, of which “A-share spin off a” is the main direction, and most of the science and innovation board and gem that implement the registration system are the first choice.
traditional car companies plan to spin off and list
In the A-share split lineup, traditional car companies have become a team that can not be underestimated. If Byd Company Limited(002594) intends to spin off Byd Company Limited(002594) semiconductor to be listed on GEM, it has been approved by the municipal Party Committee on GEM Great Wall Motor Company Limited(601633) plans to spin off honeycomb energy to be listed on the science and innovation board Saic Motor Corporation Limited(600104) plans to spin off jiehydrogen technology to be listed on the science and innovation board Guangzhou Automobile Group Co.Ltd(601238) is stepping up preparations for the split of gac-e’an
The implementation of the A-share spin off and listing policy provides operating space for the spin off and listing of auto enterprises. Since 2021, the production and sales of new energy vehicles have made rapid progress, and the valuation of new forces in car manufacturing has soared. The market’s valuation of traditional car enterprises is very low, basically ignoring that these traditional car enterprises contain strong new energy vehicle business. Such a split in market valuation has promoted traditional car enterprises to plan to spin off the new energy vehicle business and list it separately.
The reporter noted that in the process of splitting up the new energy business, traditional car enterprises often “lead wars for their children”. “The layout of traditional car companies in the new energy track is mostly in the state of ‘burning money’, and multiple rounds of financing can be said to be the inevitable demand of development; at the same time, it can attract a large number of funds, which also shows that the market is generally optimistic about the future prospects.” Insiders also told reporters. He bluntly said that both the introduction of war investment and the seeking of spin off and listing reflect that traditional automobile enterprises are actively “replenishing blood” for the new energy business in order to become bigger and stronger.
Taking Saic Motor Corporation Limited(600104) as an example, on November 26, 2021, Saic Motor Corporation Limited(600104) disclosed that it planned to spin off the holding subsidiary of hydrogen fuel cell to be listed on the science and innovation board. According to the data, jiehydrogen technology has the capacity of high-power hydrogen fuel cell stack and system design, development and mass production, and the ability of hydrogen fuel cell vehicle adaptation development. However, according to the financial data of Czech hydrogen technology in recent years, it began to have revenue in 2019, with a revenue of 112 million yuan in that year; In 2020, the revenue will be 247 million yuan. The net profit attributable to the parent company has not been regularized, which was -33.701 million yuan and -930584 million yuan in 2019 and 2020 respectively.
In terms of equity structure, Saic Motor Corporation Limited(600104) holds 68.30% equity of jiehydrogen technology directly / indirectly, and is the indirect controlling shareholder of the company. Tianyancha shows that since its establishment, jiehydrogen technology has completed five rounds of financing. The latest round of a + financing was completed on November 3, 2021. China’s state-owned enterprise mixed reform fund, Anting industry, Kaihui fund and Yinshan fund all took shares in this round of capital increase.
“Energy investment has always been guided by value investment. As a firm engaged in products and technologies in the industry, jiehydrogen technology has made great contributions to improving the efficiency and customer experience of the industry.” For this capital increase, Zhang Li, partner of smart energy team of Kaihui fund, said publicly. According to the announcement, Kaihui fund subscribed 5.3571 million yuan, holding about 0.73%.
Saic Motor Corporation Limited(600104) announced that the spin off and listing aims to improve the financing capacity of Czech hydrogen technology, connect with the capital market, broaden diversified and multi-level financing channels, and further enhance the driving force of development by financing midwifery and the combination of industry and finance.
Let’s look at Guangzhou Automobile Group Co.Ltd(601238) , which recently disclosed the progress of “war leading” of gac-ea. The company’s announcement bluntly stated that ai’an will timely start its joint-stock transformation and round a financing, and introduce market-oriented strategic investors with strategic synergy, policy guidance and market influence. “Our goal is to complete the a-round financing and joint-stock restructuring of GAC ea’an before the third quarter of this year. It is expected to consider applying for listing after implementing the a-round financing at most.” Guangzhou Automobile Group Co.Ltd(601238) relevant people admitted in an earlier interview with the media.
Byd Company Limited(002594) before launching preparations for the spin off of Byd Company Limited(002594) semiconductor, it also introduced more than 30 strategic investors including Sequoia Capital China fund, CICC capital, Xiaomi, Semiconductor Manufacturing International Corporation(688981) , SAIC and BAIC, with a huge lineup.
several well-known companies “lead the war for their children”
The reporter of Shanghai Securities News found that in addition to the above-mentioned car enterprises, the Jiangxi Copper Company Limited(600362) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) , Iflytek Co.Ltd(002230) , Dian Diagnostics Group Co.Ltd(300244) , and earlier Qingdao Tgood Electric Co.Ltd(300001) , Chongqing Zongshen Power Machinery Co.Ltd(001696) , which were disclosed to be split in 2022, had “war leading” actions before and after the split.
“It is normal for the process of spin off and listing to be accompanied by financing.” Wang Jiyue said that the spin off listing policy highlights the value of a business of a listed company with diversified businesses.
In terms of spin off cases, the subsidiaries to be spun off are often emerging industries or new technology applications, which are quite different from the traditional businesses of listed companies. For example, most of the traditional automobile enterprises to be spun off are new energy businesses, and most of the traditional resource enterprises Tongling Nonferrous Metals Group Co.Ltd(000630) , Jiangxi Copper Company Limited(600362) , Baoshan Iron & Steel Co.Ltd(600019) and other high boom sub tracks extending downstream of the industrial chain.
Take Jiangxi Copper Company Limited(600362) as an example, in February 2022, Jiangxi Copper Company Limited(600362) announced to start the preliminary preparations for the separation of Jiangxi copper foil for listing. After Tongling Nonferrous Metals Group Co.Ltd(000630) spun off Tongguan copper foil to the gem, another copper giant plans to send the “copper foil” business to the market. Statistics show that Jiangxi Copper Company Limited(600362) is an important copper, gold, silver and sulfur chemical production base in China. The subsidiary Jiangxi copper foil is mainly engaged in the R & D, production and sales of all kinds of high-performance electrolytic copper foil. Its main products include electronic circuit copper foil and lithium battery copper foil. Over the past two years, the prosperity of the copper foil industry has continued to rise, and the company has continued to expand production, split and other actions.
According to the equity structure of Jiangxi copper foil, in addition to Jiangxi Copper Company Limited(600362) holding 70.19%, there are multiple capital holdings. Tianyancha shows that honeycomb energy, Shuangbai fund, Citic Securities Company Limited(600030) investment, Yuhua fund and Jiangling Dingsheng all invested in shares in January 2022 Jiangxi Copper Company Limited(600362) in the investigation of receiving investors disclosed on March 17, he said frankly on the progress of the spin off: “Jiangxi copper foil spin off and listing has completed the preliminary mixed reform and the introduction of strategic investors. At present, it is advancing in an orderly manner according to the plan. The company is formulating a spin off and listing plan, which will be announced in due time after being reviewed and approved by the board of directors and submitted to the general meeting of shareholders of the company.”
In many of the above spin off cases, the target market of spin off listing is mostly the science and innovation board or the gem, and the Beijing stock exchange may be selected in the future.
Rush to split up the giant い
“As for the reasons for the active admission of capital, it is simple, profitable and reliable.” Wang Jiyue said. For the logic of the feast of split food and split listing, he believes that on the one hand, these subsidiaries have good growth and have been cultivated in listed companies for many years, and corporate governance and information disclosure are relatively reliable. Investing in listed companies, whether in the secondary market, block trading or fixed growth, is invested in the listed company as a whole. If the listed company is a traditional business as a whole, the valuation is actually limited and the return on investment is also low. The subsidiaries invested and split are optimistic about the prospect of Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) new technology, and the growth of subsidiaries will be much greater than that of listed companies as a whole. The return brought by successful listing will also be higher than that brought by buying shares of listed companies.
The reporter noted that most of the successful war investments that can “grab a position” in the investment of A-share spin off subsidiaries come from a big source. Take Byd Company Limited(002594) semiconductor with a strong “lead war” lineup as an example. As China’s largest vehicle specification level IGBT manufacturer, Byd Company Limited(002594) semiconductor raised 1.9 billion yuan in a round in May 2020, which was divided up by Sequoia Capital China fund, CICC capital, SDIC innovation and other well-known investment institutions.
Less than a month later, Byd Company Limited(002594) semiconductor increased its capital and shares again, and South Korea SK group, Xiaomi group, China Merchants Bank International, Lenovo Group, CITIC industry fund, hou’an fund, SMIC Juyuan, SAIC industrial investment, BAIC industrial investment, Shenzhen Huaqiang Industry Co.Ltd(000062) , Shenzhen V&T Technologies Co.Ltd(300484) , Shenzhen Invt Electric Co.Ltd(002334) and other institutions gathered to pursue it. Since then, Byd Company Limited(002594) semiconductor has successively completed round B and round C financing, and the national advanced manufacturing industry investment fund, China Unicom CICC and China Power CICC have entered the market together.
Unlike Byd Company Limited(002594) , Dian Diagnostics Group Co.Ltd(300244) plans to introduce investors into its subsidiary kalep as “simple but not simple”. In January 2021, Dian Diagnostics Group Co.Ltd(300244) disclosed that kailaipu planned to increase capital by 150 million yuan and introduce three financial investors. Among them, Zhuhai hilling Youheng equity investment partnership (limited partnership) under hilling capital plans to increase capital by 80 million yuan, and will hold 7.62% equity of kailaipu after the capital increase. The purpose of kailaipu’s capital increase is to “qualified listing”.
Let’s look at Iflytek Co.Ltd(002230) , which was disclosed in August 2021 that iFLYTEK medical, a subsidiary to be split, is seeking listing. Tianyancha shows that on November 30, 2021, iFLYTEK medical completed a + round of financing, with Tongchuang Weiye, iFLYTEK venture capital and Tianzhi fund as investors. In terms of the investor’s background, Tongchuang Weiye is the first batch of professional private equity investment companies in China, with a managed asset scale of more than 30 billion yuan. Taking industrial chain investment as the starting point, it focuses on emerging industries, deeply excavates invisible champions, and has successfully promoted the listing of nearly 100 enterprises. IFLYTEK venture capital focuses on investment in intelligent technology and application innovation. It has successively invested in Shangtang technology, Cambricon Technologies Corporation Limited(688256) , youbixuan, Guoyi quantum and other excellent Unicorn companies.
In addition, according to the industry, the significance of spin off is that the incentive to the management of subsidiaries can be more direct. For PE, one of its tasks is to better bind the capital with the management to jointly maximize the interests. The spin off undoubtedly provides a better investment thrust. In terms of investment risk, the subsidiaries of listed companies plan to invest in IPO projects, which can be advanced or retreated. If the IPO fails, venture capital can also realize the suboptimal exit by repurchasing the shares of subsidiaries or changing them into the equity of listed companies.
