Image credit: Visual China

On December 9, Blue Whale News reported (by journalist Ao Yulian) that after being put up for auction for four years, the 34.21% equity of Pioneer Fund has finally landed, incorporated by Beijing Compass Technology Development (300803.SZ).

Recently, documents approved by the CSRC show that Beijing Compass Technology Development has been authorized to acquire 34.21% equity in Pioneer Fund. Combined with the previously held 4.99%, the current shareholding ratio has increased to 39.20%, making it the largest shareholder of Pioneer Fund.

In 2019, the "Pioneer System" collapsed, with its associated Financial Institutions being auctioned and restructured. Beijing Compass Technology Development seized this opportunity to acquire Maigao Securities and Buy the equity of Pioneer Fund.

Starting from the C-end stock market platform, and now holding both public fund and Brokerage licenses, the market believes that Beijing Compass Technology Development is attempting to 'feel its way across the river like East Money Information.' Maigao Securities has turned a profit, while Pioneer Fund, which has suffered losses every year since its establishment and has a scale of only 2.9 billion, faces a difficult road to revival.

The main shareholder of Pioneer Fund has changed to Beijing Compass Technology Development.

On December 6, the CSRC issued a document titled 'Approval for the Change of the Main Shareholder of Pioneer Fund Management Co., Ltd.', which shows that Beijing Compass Technology has been approved to become the main shareholder of Pioneer Fund, acquiring 34.2076% (abbreviated as '34.21%') of the equity.

On December 25, 2023, Beijing Compass Technology Development invested 0.11 billion yuan, winning 34.21% of the shares of Vanguard Fund after five bidding rounds, and has now entered the regulatory approval stage. Now, on the eve of the auction's one-year anniversary, regulatory permission has been granted.

Half a month before acquiring this portion of shares, Beijing Compass Technology Development had already invested in Vanguard Fund. On December 11, 2023, Beijing Compass Technology Development bought 4.99% of the shares of Vanguard Fund and completed the industrial and commercial change registration.

This means that after completing the industrial and commercial registration, Beijing Compass Technology Development will hold 39.20% of the shares of Vanguard Fund, making it the largest and major shareholder of the company. In addition, the other shareholders of Vanguard Fund include: Dalian Yalian Investment (holding 33.31%), Peking Pengkang Investment (holding 22.5%), and Peking Fuzhongda Investment (holding 4.99%).

In fact, four years ago, this portion of shares in Vanguard Fund was put up for auction.

In 2019, the 'Vanguard System' financial business faced a crisis, with issues in its online credit platform, P2P business, and private equity fund, following the death of its actual controller Zhang Zhenxin in London, United Kingdom, leaving the 'Vanguard System' companies with hundreds of billions in financial holes, which also affected Vanguard Fund.

Due to the forced execution against the joint venture group of the 'Vanguard System', in April 2020, the 34.21% stake in Vanguard Fund was publicly auctioned, starting at a price of 59.31 million yuan, but this auction was subsequently withdrawn.

In February 2022, the Intermediate People's Court of Taizhou City, Jiangsu Province, once again conducted a public online auction for this portion of shares, starting at a price of 68.21 million yuan, an increase of nearly 15% over the previous round. Ultimately, Yuan Duo, the founder of Private Equity Lanshi Asset Management, purchased it for approximately 0.11 billion yuan. If the transfer is successful, Vanguard Fund will become a 'private equity public fund'.

However, this equity transaction did not obtain regulatory qualification review and had to be auctioned off again.

With licenses for both Brokerage and public offerings, is Beijing Compass Technology Development "feeling its way across the river with East Money Information"?

The new shareholder, Beijing Compass Technology Development, is a securities analysis software developer and securities information service provider, founded in 1997 and listed on the GEM in 2019.

In July 2022, Beijing Compass Technology Development acquired 100% equity of Wangxin Securities (later renamed to Maigao Securities) with a transaction price of 1.5 billion yuan, which is closely related to the "Vanguard system," and has now successfully become the largest shareholder of Vanguard Fund.

Originally starting as a C-end stock platform, it now holds licenses for both Brokerage and public offerings, and there is a general perception that Beijing Compass Technology Development intends to "feel its way across the river with East Money Information," aiming to replicate the financial business strategy of East Money Information.

Beijing Compass Technology Development does not shy away from the label of "little East Money" and has publicly aligned itself with East Money Information multiple times.

Image source: Beijing Compass Technology Development announcement.

Regarding taking control of Vanguard Fund, Beijing Compass Technology Development previously stated that investing in Vanguard Fund is a win-win trade.

On one hand, it helps Beijing Compass Technology Development to form a new business development pattern centered on financial information services, with securities services and public fund services as its "two wings".

On the other hand, the data advantages, technology advantages, and customer resource advantages accumulated by Beijing Compass in the field of financial information services can provide more comprehensive and accurate market analysis support, investment research support, and product sales channel support for Vanguard Fund, helping them better meet investment needs.

However, the reality is that the road to achieving "the best of both worlds" may be quite difficult.

On one hand, the operating conditions of the Shareholder Beijing Compass are also unstable, and there is a trend of decreasing profit, so the extent to which they can support Vanguard Fund remains to be seen.

The earnings reports of Beijing Compass show that from 2021 to 2023, the company's net income was 0.176 billion yuan, 0.338 billion yuan, and 0.073 billion yuan, with a net income of -0.049 billion yuan in the first half of 2024.

Compared to public funds backed by state-owned shareholders, the private shareholder Beijing Compass is obviously not competitive in terms of capital.

In fact, in July this year, when the regulator approved Beijing Compass's acquisition of shares in Vanguard Fund, there were also doubts about the supplementary funds that Beijing Compass could provide.

The approval required Beijing Compass to provide a detailed explanation regarding the reasons for the insufficient supplementary funds based on its own operating situation and financial condition, and to further improve the continuous capital supplementation arrangements for the controlling institutions, Maigao Securities and Vanguard Fund, in the absence of relevant funds.

Image source: China Securities Regulatory Commission approval, July 2024.

On the other hand, since the shareholders of Pioneer Fund were subject to enforcement, the company has halted its new issuance business for 5 years, with the last new issuance being in August 2019, when the Pioneer Bo Ying Pure Bond Fund was issued.

In order to restart business, Pioneer Fund needs to rebuild and support its channels, funding, and research capabilities.

As of the end of the third quarter of 2024, Pioneer Fund's asset management scale is 2.924 billion, ranking 143rd among 155 public fund companies. It managed 9 products, with 2 bond funds totaling 2.822 billion yuan, accounting for 90% of the company's scale, and 5 hybrid funds, but the scale is only 0.062 billion yuan.

Pioneer Fund was established in 2016, and in the years with disclosed Net income (2016 to 2020), the company has been in a state of loss. In the fierce competition among public offerings, it is undoubtedly difficult for Beijing Compass Technology Development to turn Pioneer Fund into a profitable entity.