PE Investment New Battleground: A Shares Private Placement

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This time, PE is more fierce. In addition to PE, a state-owned company, some newly established PE are also involved.

"For some investment institutions that can not get the project, participating in private placement is still a good choice."

A partner of Jiangsu and Zhejiang PE fund told reporters.

Meanwhile, according to CHINA VENTURE research data, in the first quarter of 2011 PE investment type, growth investment cases were 42, PIPE (private equity).

PE new battleground

"The fierce competition in the project has brought about the high cost pressure of PRE-IPO. At present, many of the PE funds have already started joint venture with the insurance companies, trust companies and even social security partners to invest in the private placement of the listed companies so as to achieve considerable profits."

The above Jiangsu and Zhejiang PE personage disclosed to reporters, many people around him have begun to participate in A shares listed company's private placement.

In addition to Zhejiang Silicon Valley paradise, Kun Cheng venture capital company, Changzhou investment group, Shenzhen Invest-holding Company and other regulars, Shenzhen new technology investment company, Shenzhen ping an innovation capital investment company, Xiangjiang industrial investment company and many other new faces are also listed as the participants of ZOOMLION, Shenzhen textile A and other private placements.

"Some of the new stock market breakage and the decline in overall price earnings ratio have led to a decline in PE revenue. Under such circumstances, many PE have to start looking for new sources of profit, and the targeted placement of listed companies is one of their choices.

However, they do not make much profit, generally around 20%, and the good situation can reach 70%. "

The above Jiangsu and Zhejiang PE personages revealed.

Take the lucrative YOUNGOR investment company participating in private placement as an example.

In April 18, 2011, the annual report released by YOUNGOR showed that in 2010, the net profit of YOUNGOR's financial investment business was 1 billion 245 million yuan.

Among them, the company actively participates in private placement and PE investment, and achieves a total investment income of up to 2 billion 60 million yuan, especially the disposal of the sale of financial assets to achieve 1 billion 865 million yuan, accounting for a considerable share of its total profits.

According to the data, in 2010, YOUNGOR was involved in the directional addition of more than 10 companies in Shanghai automobile, ZOOMLION, China Air China and Xugong machinery. By the end of the period, the accounts were all displayed as floating.

According to the preliminary calculation, the total investment cost of the company in 2010 was about 4 billion 400 million yuan, of which the investment of more than 1 billion yuan for Shanghai automobile and Xugong machinery was about 1 billion 200 million yuan.

These companies had a market capitalization of about 6 billion 300 million yuan at the end of the year, and the book investment income was 43%.

How did YOUNGOR achieve these investment returns and get substantial returns?

According to people familiar with the matter, YOUNGOR's participation in the private placement of listed companies is mainly based on its investment organization Kay stone investment.

"The relationship between YOUNGOR and us can be said to be the relationship between customers and service companies, and we provide them with advisory services."

Kai Shi investment insider told reporters.

So, what kind of cooperation is the two?

How does Kay stone invest in the private placement of listed companies?

"They are mainly tracking and screening some listed companies, and providing us with investment advice in the form of reports. However, the final decision is decided by our decision Committee."

YOUNGOR secretaries official told reporters.

Kay stone investment insider also said: "we will provide them with reports at each stage, from the start of the project, to those who do not track, track, focus on tracking companies and finally decide which companies to vote, and communicate with them.

But we only suggest that they should cling to it.

The choice is very prudent. Sometimes we think that a good company, if they have different views, will not do it. "

From this we can imagine Kay stone investment to participate in the process of private placement of listed companies: Kay stone investment research and analysis, the selected listed company information to YOUNGOR's investment decision committee to make a decision, and then Kai Shi investment and these listed companies approached, further discussion on investment prices and other details, and ultimately invest.

"Generally speaking, the price of PE participating in the private placement is probably the average value of the 3 month share price of a listed company, or a certain discount, which is the same treatment for the PE fund and other investors."

The insider told reporters.

Project "mine"

"Low cost, high yield and avoiding regulation become the important reasons for PE to withdraw from private placement."

A person in the industry told reporters, "item company through the private placement and asset injection to achieve the listing method is very similar to the backdoor listing, but the private placement and asset injection is less time cost than backdoor listing, and the difficulty of approval is low."

"Every PE has a story behind its private placement."

Another insider told the investor newspaper that PE companies and listed companies can come together with "different plans". The listed companies are also worried about selling the private placement, so they hope to find more organizations to participate in the inquiry before the private placement, while for the PE fund, many times are to achieve the exit of an investment project, so they often do not pay special attention to the short-term price.

"In addition, at the level of the real economy, it is easy for listed companies to communicate with PE on specific purposes of private placement.

Therefore, PE can clearly see the company's development prospects according to the purpose of private placement of listed companies.

Another case is that PE has invested in this company and is well aware of it and is also very optimistic about its future development.

The person said that with the PE fund investment companies continue to be listed, PE participation in the private placement of listed companies will also be more and more.

However, keen enthusiasm is not for every PE to participate in the private placement of listed companies.

Hongyi's investment in ZOOMLION has led to a loss.

Statistics show that in June 2006, Lenovo Hongyi invested in ZOOMLION and became the second largest shareholder.

In February 11, 2010, ZOOMLION announced that 298 million shares were issued on a non-public basis, offering a price of 18.7 yuan / share and a total of 5 billion 570 million yuan.

Among its non publicly raised investment targets, the first phase of the investment fund of Hongyi investment, which has entered ZOOMLION's strategic investment as a strategic investor, has been allocated 52 million 630 thousand shares, totaling 980 million yuan.

ZOOMLION said: "the company has successfully raised all the funds raised in the plan, and the discount rate of the final issue price corresponding to the closing price of the day is only 14.7%, which is lower than that of the general private placement discount of 20%~30%."

In April 26th, the closing price of the stock was 15.32 yuan, while the cost of Hongyi investment was 18.7 yuan / share, and now it has lost nearly 180 million yuan.

"Apart from listing breakage, the biggest risk for PE to participate in private placement is that the price after the lock up period is hard to predict."

The above Jiangsu and Zhejiang people told reporters.

At the same time, a PE agency involved in private placement also told reporters that at present, due to the instability of the two level market, they have rarely participated in the private placement of listed companies.

"The benevolent man sees the wise, and the wise sees the wisdom," and the final decision is the manager of the PE fund.