On December 30, 2014 Feitian Honest and Jiuding Investment jointly launched the establishment of Shanghai Winding Investment Center in the Shanghai Free Trade Zone, and as a platform for Feitian Honest's industrial mergers and acquisitions and integration, the fund will focus on the investment opportunities in the process of mergers, acquisitions and restructurings of the relevant subject companies in the upstream and downstream of the information security industry chain. The fund will focus on investment opportunities in the process of M&A and restructuring of relevant subject companies in the upstream and downstream of the information security industry chain, and will be committed to serving the M&A growth of listed companies, promoting the company's value creation, and laying out in advance in the areas of Internet, mobile Internet, cloud computing and other fields related to the company's ecology.
The fund is organized as a limited partnership with a size of 300 million and a duration of 5 years. Flying Integrity as a limited partner of the fund, with its own capital contribution of 150 million yuan, the rest of the partners *** with the collection. According to the investment progress of the fund, Flying Integrity and Jiuding Investment can make additional investment to expand the fund size.
Advantages: Since the listed company invests a larger proportion of capital, it provides endorsement for the rest of the M&A fund, and it is easier to raise capital; it can give full play to the advantages of PE organizations in fund raising and fund management, and the listed company is not required to invest energy in managing the M&A fund.
Disadvantage: The listed company invests a large amount of money in the early stage, which takes up the operating cash flow of the company's main business.
Model 2: PE firms contribute 1-2% of the capital, and the listed company or its major shareholder contributes the rest as a single LP
Case: Nine Pie Capital and Dong Yangke (stock code: 600673)
In July 2014, Nine Pie Capital and Dong Yangke cooperated to set up the "Shenzhen Nine Pie Dong Yangke Mobile Communication and New Energy Industry M&A Fund". New Energy Industry Merger and Acquisition Fund", giving full play to their respective advantages, as the industrial integration platform of Dong Yangke, carrying out investment, merger and acquisition, integration and other businesses around the established strategic development direction of Dong Yangke.
The fund is organized as a limited partnership with a fund size of 300 million yuan. Nine Capital as the GP of the fund, contributed to the capital of 0.03 billion yuan, the proportion of capital contribution is 1%, East Sunshine as the LP of the fund, contributed to the capital of 297 million yuan, the proportion of capital contribution is 99%.
Advantages: the funds are mainly provided by the listed company, the listed company has greater decision-making rights; the future share of the later gains is higher than other models of M&A funds.
Disadvantages: this kind of M&A fund is usually small in scale, unable to carry out mergers and acquisitions of large-scale targets; and most of the capital is contributed by listed companies, unable to play the role of capital market leverage.
Model 3: listed companies (or listed companies and other companies controlled by major shareholders together) and PE institutions *** with the launch of the establishment of an "investment fund management company", the company as the GP to set up mergers and acquisitions fund, the listed company invested 20-30% of the listed company and PE institutions *** with the responsibility for raising funds, the rest
. The rest
Case: JD Capital and HNA Group
On July 21, 2015, JD Capital and HNA Logistics Group and its subsidiary Tianxing Investment initiated the establishment of Tianxing Jiuding Investment Management Company Limited, which acted as GP to launch a logistics industry investment fund. The fund, with a total size of 20 billion yuan, focuses on investing in leading niche industries and innovative logistics companies within the logistics industry.
Advantages: PE firms and listed companies*** share management fees and revenue sharing as GP shareholders;
Disadvantages: Listed companies need to bear the responsibility of fund-raising, and as shareholders of the fund manager, they face the problem of double taxation.
Model 4: The listed company contributes 10-20%, the structured investor contributes 30% or more as priority, the PE organization contributes less than 10%, and the PE organization is responsible for raising the remaining part.
Case: Jinshi Investment and Lepu Medical (Stock Code: 300003)
On August 25, 2014, Lepu Medical and Jinshi Investment initiated the establishment of "Lepu-Jinshi Health Industry Investment Fund" as the GP to launch the logistics industry investment fund. The total size of the fund is 1 billion yuan, of which LP Medical contributes 150 million yuan, Jinshi Investment contributes 85 million yuan, and Jinshi Investment is responsible for raising the remaining funds from structured investors. The fund focuses on investing in the healthcare industry, mainly including investment in medical devices, equipments, medicines, and their upstream and downstream industries; and acquisition and trusteeship in the medical service industry (mainly for hospitals).
Advantages: Since the preferred investor requires a lower return, the use of more structured funds can reduce the cost of capital use, and the leverage effect is obvious;
Disadvantages: Structured fund-raising generally requires a full amount of collateral or guarantees, and requires a clear merger and acquisition target. If the bank as a priority then the internal audit process is more cumbersome, the fund set up less efficient.
Model 5: The listed company contributes less than 10%, the PE organization contributes 30%, and the PE organization is responsible for raising the remaining part.
Case: Haitong Kaiyuan and Orient Venture (stock code: 600278)
On October 31, 2013, Orient Venture released an investment announcement, saying that it had invested 5 million yuan to launch the establishment of "Haitong M&A Capital Management Co. ", and invested 145 million yuan to subscribe to the M&A management company issued by the M&A fund, the fund size of 3 billion yuan.
GP is Haitong M&A Capital Management Co. Haitong Kaiyuan contributes 51 million yuan, accounting for 51% of the share ratio, and Orient Venture intends to contribute 5 million yuan, accounting for 5% of the share ratio; of the LP, Haitong Kaiyuan intends to subscribe 1 billion yuan, Orient Venture intends to subscribe 145 million yuan, and the remaining contribution will be raised by Haitong Kaiyuan.
Advantages: listed companies only need to occupy a small amount of money can pry a lot of money to achieve the purpose of mergers and acquisitions;
Disadvantages: listed companies need to be very high quality, PE organizations have a strong fund-raising ability, mergers and acquisitions of the target is clear, the short-term investment can be a large amount of revenue.