I've written about many listed companies with the intention of finding flaws in the public information, and I've tried to figure out the underlying logic and core issues behind the capital operations.
For example, Dongxu Group's finance company; Hero Hublot's "Financing - Betting - Related Party Acquisition"; Tianfeng Securities' no-controller status and large financing at a critical point; and Yiyang Xintong's listed company's shell and the group's bankruptcy and forced cuts.
Success or failure is only the appearance of the business clouds, the core logic behind is the essence of capital operation.
The former school enterprise "Neusoft Group", since its establishment in 1991, to 2020, has developed into the control of Neusoft Group (SH.600718), Neusoft Education (HK.9616), and the successful spin-off of the Neusoft medical, Neusoft Xikang, Wang Haikangxin preparation for the Science and Technology Board The controlling group of the company is listed on the Science and Technology Board (STB). The actual controller also changed from Northeastern University to Liu Jiren under the leadership of the "no actual controller" state.
"Neusoft" capital operation of the core logic, it is the spin-off and MBO, the two complement each other, through the spin-off to promote the development of innovative business, through the MBO to facilitate the control of Neusoft Group.
Liu Jiren, China's first doctorate in computer science, became China's youngest university professor at the age of 33, built China's first software park, and single-handedly created a highly influential software empire.
In 1988, the Northeast Institute of Technology, Department of Computer Science, Software and Network Engineering Research Laboratory was established, all the home base is one and a half of the research room, three 286 computers, 30,000 yuan of research funds.
From the U.S. National Bureau of Standards to return home, was promoted to professor Liu Jiren is in such a research environment, built a technology transfer center.
In 1989 and 1991, Alpine Japan, a major producer of automotive audio and automotive communication systems, visited Northeastern University twice to seek research collaboration on automotive interior systems, and Liu's team finally impressed Alpine with $300,000 in startup funding.
Northeastern Polytechnic University Open Software System Development Company and Alpine established the Shenyang Donggong Alpine Software Research Institute as a joint venture, which was later merged into Dongda Alpine Software Company Limited, which was the starting point of Neusoft Group, and later the main body of the listing.
The development of Neusoft, with 2011 as the boundary, went from the "merger" before 2011 to the "division" after 2011.
From 1993 to 1995, the IPO also implemented the quota system of the distant era, Shenyang Dongda Alpine because of the backing of Northeastern University, belonging to the Ministry of Metallurgical Industry Department of the school enterprise, in 1995 was approved to obtain the listing quota, and in 1996 successfully listed. The internal employee shares, which accounted for 10% of the total share capital before issuance, amounted to 4 million shares, which were listed and circulated in batches.
At the beginning of the listing, the controlling shareholder of Dongda Alpine was the Software Center of Northeastern University, and the interests of the management team and employees were mainly reflected in the 4 million internal employee shares, but the team's demands were obviously more than that.
In 1998, Northeastern University by the Ministry of Metallurgy Ministry of change to the Ministry of Education directly under the Ministry of Education, in May, Northeastern University Software Center will be held by the shares of the listed company transferred to the Northeast Software Group, in November, the Baosteel Group of the Northeast Software Group to increase the company's capital, the company was renamed Baosteel Neusoft. 1 year later, the Baosteel Group, the software center of Northeastern University, such as the union of the Baosteel Neusoft transfer of 21% of the shares of the staff interests. Through the labor union, get a greater degree of expression.
In 2001, Baosteel Neusoft changed its name to Neusoft Group, and for compliance reasons, the Baosteel Neusoft labor union was eventually quantified into a 137-employee shareholding platform, Shenyang Huixu Technology. Until 2008, Shenyang Huixu Technology held 23.42% of Neusoft Group's shares, the second largest shareholder after Northeastern University.
In 2008, the Securities and Exchange Commission (SEC) approved the merger of Neusoft Group and Neusoft Corporation, and the listed company was renamed Neusoft Corporation.
The merger of Neusoft Corporation and Neusoft Group, which has been developing in parallel, has benefited all parties. As of the end of 2010, the major shareholder of Northeastern University Industrial Group held a market value of 3.470 billion yuan, the employee shareholding platform as the second largest shareholder held a market value of 3.381 billion yuan, Alpine held a market value of 2.747 billion yuan, Baosteel held a market value of 1.954 billion yuan.
In 2011, the first phase of Neusoft Group's development ended with the liquidation of the employee shareholding platform, and all 137 natural person shareholders gained considerable wealth.
In March 2011, the shareholding platform was transferred to Chengdu, renamed Chengdu Huixu Technology, and the shares held by the shareholding platform were allocated to 137 shareholders through a court ruling of compulsory liquidation. Starting a business from scratch, leading Northeastern University, Alpine, Baosteel, 137 employees to become rich, Liu Jiren, after the implementation of the shares, *** counted 7.16 million shares of the listed company, accounting for 0.58% of the shares of the listed company.
Neusoft Holdings is also in this context, to the front of the stage.
For Neusoft Holdings, which relies on Northeastern University's School of Software to get started, Neusoft Education is of extraordinary significance. The first battle of Neusoft Holdings is to take Neusoft Education.
In November 2011, Neusoft Holdings was formed by Dalian Conrado in conjunction with Northeastern University and Yida Investment***. Behind Dalian Kangredao is Liu Jiren and 22 other natural person shareholders.
Neusoft's education business started in 2001 and has been profitable since 2007, with revenue of 305 million yuan and a profit of 1.68 million yuan.
In 2008, after the merger of Neusoft Group and Neusoft Holdings, the education segment was incorporated into the listed company system with Dalian Neusoft Software Park Industrial Development Co.
In December 2011, the listed company announced that Neusoft Holdings was given the education assets of Neusoft Group for a consideration of 424 million yuan, a consideration that only took into account 10.43% of the appreciation of housing and land on the basis of the consolidated net assets.
In 2020, Neusoft Education applied for listing on the Hong Kong Stock Exchange, with a net profit of 115 million yuan, 132 million yuan and 139 million yuan from 2017 to 2019. The night before the listing became the "king of the dark market", soaring more than 25%, the market value of 4 billion yuan.
In the divestment of Neusoft education at the same time, in 2012, Neusoft Holdings and Yida Group *** with the establishment of Tianjin Neusoft Ruidao, for universities to provide IT training and human resources services, that year, that is, to achieve profits of 34.97 million yuan.
Neusoft Education's profit composition, in addition to nearly 80% of the higher education tuition and accommodation fees, but also includes the Neusoft Holdings rely on the realization of the "integration of industry and education" business income.
2012-2014, Neusoft Group to Tianjin Neusoft Ruidao paid service fees of 32.5 million yuan, 121 million yuan and 133 million yuan, respectively. 2015 onwards, Neusoft Group to disclose the amount of related transactions in a consolidated manner, the year the payment of service fees of 178 million yuan, and in 2019, Neusoft Group to Neusoft Holding to pay the service fees of up to 390 million dollars.
Listed company Neusoft Group divested the education sector, and entrusted Neusoft Holdings to provide software outsourcing services, outsourcing gross profit margin of 13%, can be said to kill two birds with one stone, Neusoft education to achieve stable profits, and Neusoft Holdings and its shareholders gained considerable benefits.
And that year, the education sector from the listed company when the divestment, the price is only for the net assets plus a mere 10.43% of the appraisal of the value-added, the development and growth until the independent listing of Neusoft education and did not bring income to the listed company.
On the one hand, the original shareholders reduced their holdings of the listed company, and on the other hand, the management team and the introduction of shareholders to increase the capital of Neusoft Holdings, which gradually consolidated its position as the largest shareholder of Neusoft Group by increasing its holdings of the listed company twice.
Since 2015, the major shareholders who have been following Neusoft Group, Northeastern University, Alpine, Baosteel reduced their holdings of listed companies one after another.
In March 2015, Baosteel Group announced a cumulative reduction of 5.2% of the shares, after the reduction of shares held in Neusoft Group total share capital of 4.72%.
In July 2015, Alpine transferred 5% shares of Neusoft Group to Neusoft Holdings for a total consideration of 1.066 billion yuan.
In December 2016, Northeastern University Industrial Group announced that the cumulative reduction of its holdings reached 5% of the total share capital of Neusoft Group.
In At the same time, the management team and the introduction of shareholders to Neusoft Holdings to increase the capital, Neusoft Holdings to the listed company, then twice increase the shareholding, and eventually become the largest shareholder.
In September 2015, PICC increased its capital to Neusoft Holdings by 1.012 billion yuan.
In December 2015, Alpine increased its capital by 577 million yuan to Neusoft Holdings.
After the capital increase, Neusoft Holdings was valued at 5.574 billion yuan. However, according to the 2014 annual report of Neusoft Holdings, the net assets of 370 million dollars, the net profit was only 32.7834 million dollars.
In November 2016, Dalian Kang Rui Dao holding subsidiary Dalian Neusoft Thinking to Neusoft Holdings capital increase, according to the valuation of 5.574 billion yuan in 2015, this capital increase to 10.82%, costing more than 676 million yuan, while Dalian Neusoft Thinking 2013 net assets of only 9.48 million yuan.
Neusoft Holdings can be in accordance with the valuation of 4-5 billion successive three times to raise more than 2.2 billion yuan, and the acquisition of Neusoft Education in 2011, the realization of outsourcing services revenue is inseparable, and therefore gained further control of the chips of Neusoft Group.
In December 2016, Neusoft Holdings increased its stake in the listed company to 10%, for a transaction consideration of 1.193 billion yuan.
In January 2017, Neusoft Holdings again increased its stake to 11.37%, with a transaction consideration of $325 million.
So far, along with the original major shareholder Northeastern University and the second shareholder Alpine's successive reductions in shareholding, giving up the controlling position; Neusoft Holdings with a total of about 2.584 billion yuan of consideration, became the first major shareholder of Neusoft Group. The main source of funds is the capital increase payment from PICC, Alpine and Dalian Kang Rui Dao. in March 2017, Neusoft Holdings pledged all of its shares in the listed company.
From 2014 to 2017, Neusoft lost control of Neusoft Medical, Neusoft Xikang and Neusoft Wanghai through capital increase and equity transfer.
Under Neusoft's big health board, Neusoft Medical, originated from the CT equipment of Northeastern University's Imaging Center; Neusoft Xikang is the main operating body of the cloud hospital board; and Neusoft Wanghai's main business is medical information technology.
In December 2014, Neusoft Group announced that Neusoft Medical intends to introduce investors, Hony Capital, Goldman Sachs, Tonghe and Neusoft Holdings to use the way of the old shares and capital increase, to contribute 2.733 billion yuan (of which 1.6 billion yuan), a strategic investment in Neusoft Medical, pre-investment valuation of 2.5 billion yuan. Among them, Neusoft Holdings invested 900 million yuan, holding 22.2% of the equity of Neusoft Medical after the capital increase.
In July 2016, after two rounds of delivery agreements, Neusoft Group lost control of Neusoft Medical.
In September 2017, Dalian Kang Rui Dao continued to invest an additional $422 million in Neusoft Medical at a valuation of $4.254 billion.
Neusoft Holdings and Dalian Kangredao, for a total consideration of approximately $1.322 billion, acquired approximately 24.4% of Neusoft Medical.
In July 2020, Neusoft Medical applied for a listing on the Science and Technology Board (STB), and at the end of 2019, Neusoft Medical had operating revenues of $1.9 billion, while the comparable company, Wandong Medical, had operating revenues of $980 million and a market capitalization of $7.38 billion.
With the introduction of Neusoft Medical's war as it is, Neusoft Xikang introduced $170 million in financing from investors such as Hony, Goldman Sachs, Neusoft Holdings, and then $64 million in financing from PICC and Alps Electric Co. until July 2016, when Neusoft Group lost control of Neusoft Xikang.
Neusoft Holdings, on the other hand, acquired a total of 23.4% stake in Neusoft Xikang through two capital increases of $43 million and RMB 94 million. Neusoft Xikang is also currently actively preparing for a listing on the Science and Technology Board.
It's worth noting that the spin-off of Neusoft Medical and Neusoft Xikang spanned exactly the same time as the capital increase of Neusoft Holdings by PICC and Alpine:
In December 2014, Neusoft Group announced the spin-off plan of Neusoft Medical and Neusoft Xikang.
In September and December 2015, PICC and Alpine increased their capital in Neusoft Holdings at a pre-investment valuation of $4 billion.
In April 2016, Neusoft Holdings completed its capital increase in Neusoft Medical and Neusoft Xikang.
The question that cannot be avoided is whether the valuation of Neusoft and Neusoft Xikang in the capital increase of Neusoft Holdings by PICC and Alpine will take Neusoft Medical and Neusoft Xikang into consideration. Otherwise, it is difficult to explain the reasonableness of the $4 billion valuation for a company with net assets of $370 million and net profit of $32.78 million.
Neusoft Wanghai's listing plan is also in transit.
In December 2015, Ping'an Jinteng and Neusoft Holdings strategically invested in Neusoft Wanghai through capital increase and share transfers, of which Neusoft Holdings invested 206 million yuan, totaling 14.07% of the shares.
In November 2017, Ping An Life, Taikang and Neusoft Holdings made a capital increase in Neusoft Lookout with 1.504 billion yuan, and Neusoft Group's shareholding in Neusoft Lookout dropped to 29.3%, and it is no longer controlling of Neusoft Lookout. Neusoft Holding's two rounds of capital contribution totaled 223 million yuan, holding 8.23% of the shares.
Looking at the history of Neusoft's development, in Liu Jiren's words, "to retreat is to advance, in order to get more development."
Before 2011, with the "merger" as the main line, the listed company acquired the imaging center of Northeastern University to enter the medical sector, Neusoft Group merged with Neusoft Corporation, and the education sector was incorporated into the listed company.
In the process of "merger", Neusoft Group employee stock ownership platform to earn the first bucket of gold.
After 2011, the main line of the "spin-off", the sale of Neusoft education, spin-off of Neusoft medical, Neusoft Xikang and Neusoft Wanghai.
In the process of "spin-off", Neusoft Holdings was given a controlling stake in Neusoft Education, and its software outsourcing business was supported, and ultimately, through the independent listing of Neusoft Education, it made a lot of money.
At the same time, the equity value of Neusoft Education, Neusoft Medical and Neusoft Xikang spin-off program, and for Neusoft Holdings in 2015 to introduce a strategic investor to provide support for the high valuation.
Neusoft Holdings borrowed "eggs" to attract "chicken" capital operation mode, can be described as exquisite, to achieve a decade of explosive growth. But this process, as the "incubator" of the listed company, and did not benefit:
After the acquisition of education assets, the listed company and Neusoft Holdings every year, large-scale connected transactions, supporting the valuation of Neusoft Holdings and Neusoft education part of the source of profits;
Splitting of Neusoft Medical and Neusoft Xikang In the process, the listed company has committed to the repurchase liability, if successfully listed, the shareholders including Neusoft Holdings will gain a huge amount of income, once it fails to be listed, the listed company may face the risk of contingent liabilities for the repurchase of shares;
In the process of spinning off the big health board, it has successfully circumvented the requirements of the SEC for the spin-off of the listed company by the determination that there is no actual controller;
However, during the three years from October 2017 to the present, Neusoft Healthcare and Neusoft Xikang were listed on the Stock Exchange of Hong Kong Limited. In the three years from October 2017 to the present, the market value of Neusoft Group has fallen by 5 billion yuan, and the spin-off model that has continued all the way is it really the most favorable choice for the listed company?
Liu Jiren likes to use the "cat has nine lives" to say that Neusoft every five years to change a way of life, for Liu Jiren, the spring breeze of the big era of equity investment, or will be the achievement of the Neusoft system of enterprises are listed, the vast capital map.