“Science and Technology Innovation Board Daily”, April 9 (Reporter Ao Jin) Huaxi Co., Ltd. announced on the 8th that it will participate in the acquisition of part of Yicun Capital by participating in the establishment of a partnership.

According to the announcement, Huaxi Co., Ltd. and Wuxi Guolian Industrial Investment Private Equity Fund Management Co., Ltd. (hereinafter referred to as “Guolian Investment”) and Wuxi Yunshang Venture Capital Co., Ltd. (hereinafter referred to as “Yunshang Venture Capital”) jointly invested in the establishment of the Wuxi Xichuang Lianhua Equity Investment Partnership (limited partnership). The partnership's total pledged capital was 400 million yuan. In terms of investment ratios, Huaxi Shares, China Federation Industrial Investment and Yunshang Venture Capital were 50%, 49%, and 1%, respectively. The announcement did not disclose the exact number of share acquisitions.

Huaxi Co., Ltd. stated in the announcement that this investment will help utilize the professional resources and investment management advantages of investment institutions, optimize the company's investment structure, and enhance the company's competitiveness and profitability.

Yicun Capital told the “Science and Technology Innovation Board Daily” reporter that the active participation of the participants this time is optimistic about the future long-term development of Yicun Capital.

According to public information, Yicun Capital was established in 2015 and focuses on mergers and acquisitions and industrial investment. Major mergers and acquisitions include the joint acquisition of NMS Group, an Italian oncology research and development institution, and leading the cross-border merger and acquisition of optical communication technology supplier Solstice Optoelectronics.

The equity structure of Yicun Capital was readjusted

On the morning of the 9th, the “Science and Technology Innovation Board Daily” reporter telephoned the Secretary Office of Huaxi Co., Ltd. and learned that another reason for Huaxi Co., Ltd.'s acquisition decision on Yicun Capital was to maintain the stability of Yicun Capital's equity structure. “Some shareholders want to withdraw. In order to maintain the stability of Yicun Capital's share structure, the company will buy back this portion of the shares by establishing a partnership.”

According to business information, the current controlling shareholder of Yicun Capital is China Federation Investment, which has a shareholding ratio of 41.9%; Huaxi Co., Ltd. is the second-largest shareholder, with a shareholding ratio of 40.9%. Other shareholders include: Anhui Trading Industry Development Fund Co., Ltd. (10.3%), Wuxi Huikai Investment Management Co., Ltd. (3.4%), Qingdao Federal Reserve Innovation Investment Co., Ltd. (2.8%), and Wuxi Zhijiu Enterprise Management Partnership (Limited Partnership) (0.6%).

Previously, in 2020, Huaxi Co., Ltd. sold shares in Yicun Capital at a price of over 1,056 billion yuan to China Federation Industrial Investment and Wuxi Zhijiu mentioned above, involving a total of more than 36.431% of the shares. At the time, Huaxi Co., Ltd. said that the deal was expected to cause the company a loss of about 260 million yuan.

Tang Weiqing, chairman of Yicun Capital, once mentioned this round of shareholder structure changes in an interview with the media. He said, “Thanks to the strategic support of state-owned capital, now Yicun has stronger endorsements, and 9 of the shareholders have state-owned assets. At the same time, Yicun Capital has solid net assets, making the chassis more stable.”

According to business information, China Federation Industrial Investment, the majority shareholder of Yicun Capital, is controlled by Wuxi Innovation Investment Group Co., Ltd., and penetrates upward equity. Behind it is the Wuxi State-owned Assets Administration Commission.

Judging from the investment ratio of the Wuxi Xichuang Lianhua Equity Investment Partnership (Limited Partnership) shown in the current announcement, after the completion of this round of share acquisitions, Huaxi Co., Ltd. and China Federation Industrial Investment's shareholding situation in Yicun Capital will remain at a level close to the current level.

The establishment of Yicun Capital stemmed from Huaxi Co., Ltd.'s attempt to find business growth points. In 2015, Huaxi Co., Ltd. began a strategic transformation. On the basis of the original chemical fiber industry, it carried out mergers and acquisitions investment business with asset management as the core, and established financial platforms such as Yicun Capital, Yicun Investment, and Yicun Assets.

According to the latest announcement, Yicun Capital's total assets as of the third quarter of 2023 were 5.25 billion yuan, and net profit attributable to mother was 110 million yuan.

The market is optimistic about M&A investment in the long term

A person close to Yicun Capital told the “Science and Technology Innovation Board Daily” reporter that currently the primary market is facing difficulties in withdrawing from IPOs, and the market is paying more attention to mergers and acquisitions, yet Yicun Capital has always used mergers and acquisitions as its main business, or an important consideration point for shareholders to make acquisition decisions this time. “The direct impact of this acquisition on the operation of Yicun Capital in the short term is limited. What is conveyed to the outside world is that shareholders are optimistic about Yicun Capital's merger and acquisition investment business.”

According to data, the core logic of Yicun Capital is to build an investment platform focusing on mergers and acquisitions. In the past three years, it has entered the stage of two-wheel drive with “mergers and acquisition+industrial investment”. Up to now, Yicun Capital has led more than 10 mergers and acquisitions, including helping Century Huatong complete the acquisition of Peer Point Interactive and Grand Gaming, the joint acquisition of NMS Group, an Italian pharmaceutical research and development agency in the field of anti-cancer, and leading cross-border mergers and acquisitions of optical communication technology supplier Solstice Optoelectronics.

According to statistics from the Financial Federation Venture Capital Connect, up to now, Yicun Capital has managed a total of 77 private equity investment funds, with a capital scale of about 26 billion yuan; a total of 122 investment events have been involved, involving 107 companies, of which 20 have already been listed. Yicun Capital's investment projects focus on three major fields: semiconductors, information services, and biomedicine. Its recent funded projects include Nuowei Biotech, a developer of new nucleic acid vaccines, automotive image processing chip developer Mingqi Zixin, big data service provider Haizhi Technology, and the power and energy market cloud platform Huidian Yunlian.

The above sources further stated that shareholders, including Huaxi Shares, have corresponding ecosystems and industrial circles. “Shareholders can provide long-term support for Yicun Capital, including introducing corporate resources and connecting with local investors.”

The director and secretary of Huaxi Co., Ltd. mentioned above said that the company has a board seat at Yicun Capital and will participate in major investment decisions of Yicun Capital.

In an interview with the media earlier, Tang Weiqing said that for the current market, mergers and acquisitions are preparing for greater opportunities. “On the one hand, the development of the domestic industry has entered the stage of mergers and acquisitions integration, especially the high-end manufacturing industry. We firmly believe that mergers and acquisitions will gradually become the consensus of the market. On the other hand, entrepreneurs are facing issues of inheritance and handover. In the past, entrepreneurs were more willing to let their children take over, but now this idea is changing, and more “creative generations” are expanding their thinking, hiring professional managers to manage businesses, or exploring the possibility of mergers and acquisitions.”

Regarding Yicun Capital's merger and acquisition strategy, it stated that in the future, it will deepen collaboration with the industry and explore diversification strategies. Specifically, through early intervention with a small share ratio, it will continue to increase, and eventually hold shares with the industry.