After the rapid development in recent years, the mode of setting up industrial M&A funds by listed companies + PE cooperation seems to have become "besieged city". People outside want to come in, and people inside begin to go out... The first industrial fund in the glass equipment industry is terminated. Without substantial investment projects and no capital expenditure from all sides, the first domestic industrial fund of glass equipment industry established by Beibao shares and Haitong Jihe Equity Investment Fund Management Co., Ltd. (hereinafter referred to as "Haitong Jihe") under Haitong Securities Co., Ltd. was abruptly terminated.

    On February 27, Beibao issued a notice terminating the establishment of industrial fund and canceling the partnership of Haitong Beibao (Shanghai) equity investment fund (Limited Partnership) (hereinafter referred to as "Haitong Beibao"). In September 2014, the board of directors of the company deliberated and approved a bill on the establishment of industrial fund. Haitong Beibao completed its business in January 2015. Registration. The industrial fund is set up in the form of a partnership with a target size of RMB 500 million. The company, as a limited partner of the industrial fund, intends to invest RMB 40 million. Haitong Jihe, as a general partner and fund manager of the industrial fund, intends to invest RMB 10 million.

   Since the establishment of Haitong Beibao, there has been no substantial progress in project investment and no actual investment in all aspects of cooperation. All parties agreed by consensus to terminate the industry fund and cancel Haitong Beibao. As there is no corresponding capital expenditure between the company and Haitong Jihe as of the announcement date, the termination of the industrial fund will not have a substantial impact on the company's production and operation activities. The announcement of termination was extremely brief, and at the beginning of the establishment of the industry fund in 2014, all sides had high expectations for it.

   According to the previous announcement, the industrial fund established by Beibao and Haitong Jihe is the first industrial fund established by the glass equipment industry. The aim is to attract social financial capital into glass equipment industry through strong alliance, and to develop new financial instruments and channels for further development of glass equipment industry. Accelerate the change of the status quo of small, scattered and chaotic industries, enhance the industry concentration through market competition, and enhance the technological level of glass equipment industry and its influence in the industry chain.

   The main investment direction of the industrial fund is high-tech glass technology equipment and materials and related fields of enterprise projects, and the main objective is to obtain the actual control of the target company. The pledged contribution of the industrial fund will be used to invest in the equity or non-publicly traded stocks of non-listed high-quality enterprises at home and abroad, the creditor's rights of the invested enterprises, their actual controllers and management teams associated with the equity investment, and other investments approved by the Investment Decision Committee.

    At that time, Beibao believed that by combining the company's industrial advantages in industry, market and technology with Haitong Jihe's financial advantages in fund management and market-oriented financing, and using professional financial instruments to enlarge the company's investment capacity, it would promote the acquisition or participation of the industrial fund to meet the needs of the company's development strategy. The glass technology industry or related target enterprises consolidate and improve the leading position of the company in the industry by means of industrial integration and merger and acquisition. In 2014, the first industrial fund of Beibao shares also reaped a consensus in the secondary market. After issuing the announcement of the fund, the company's share price rose all the way, rising by more than 40% in two months.

     The +PE mode of listed companies is "hot outside and cold inside". As an innovative model of M&A and reorganization market, "listed company + PE" has attracted much attention since its first appearance in domestic capital market in 2011. The number of industrial M&A funds has increased rapidly from 2014 to 2016. So far, many listed companies have joined the fund establishment army one after another. According to the statistics of the correspondent of Securities Times E Company, only from February 2018 till now, there are about 20 A-share listed companies, including Longboli, McLaren, Lemmy Pharmaceutical and Shanghai Construction Engineering, announcing that they will initiate or participate in the establishment of industrial funds. According to media statistics, between May 2015 and June 2017, 410 A-share listed companies participated in the establishment of 473 "listed companies + PE" industrial M&A funds, involving the planned financing amount of more than 700 billion yuan. At the same time, listed companies and PE model are also experiencing "internal cold". The failure of Beibei Joint-stock Industrial Fund is not an example.

     On January 27, 2018, Blue Dun announced that in November 2017, Guangdong Blue Dun Investment Management Co., Ltd., a wholly-owned subsidiary of the company, was planning to establish a partnership of Guangzhou Blue Dun Ruike Information Industry Equity Investment Fund with Guangzhou Emerging Industry Development Fund Management Co., Ltd. and Guangdong Blue Dun Win Financing Property Management Co., Ltd. Limited partnership (hereinafter referred to as "industrial fund"). The total investment amount of the industry fund was 200 million yuan, and the registration of industry and commerce was completed in December of that year. The company originally planned to accelerate its investment distribution in emerging technology through industrial funds, but in the follow-up preparatory process, the regulatory environment of private equity funds has changed, the company's investment strategy has also been adjusted, and the company's own monetary funds are relatively tight, so it decided to terminate the investment of industrial funds.

   Before that, on January 6, 2018, Beiwei Technologies also announced that in April 2016, the company intends to invest 150 million yuan in the establishment of M&A investment in mobile Internet industry with Ping An Financial Intelligence Investment Management Co., Ltd., Beijing Wonderful Tiandi Investment Consulting Co., Ltd., and Beijing Ping An Intelligence Investment Management Co. (hereinafter referred to as "Ping An Intelligence"). Capital fund. Because the CSRC has rectified and regulated the subsidiary companies of private equity funds of securities firms, the safety wisdom of one of the original fund management institutions can not continue the work of fund establishment, so the investment in the establishment of industrial M&A funds is terminated. Looking back further, on December 19, 2017, Sirte also announced that due to the lack of substantial progress in project investment since its inception, in order to improve the efficiency of fund use and in light of the actual development of the company, the company intends to terminate its investment center (limited partnership) with Wuhu Jingning Investment Center, a health care industry fund established in May 2016.

    According to incomplete statistics, since 2017, 24 A-share listed companies have announced the termination of the establishment of industrial funds. The reasons for termination include insufficient fund raising, major changes in private equity policies and market environment, etc. At the same time, many funds have not made any progress after announcement of the establishment of waiting for registration or completion of registration, and have also become "zombie funds". According to media statistics, in the current industry buyout fund, the number of zombie funds has exceeded 60%. Under strong supervision, the demand of arbitrage mode has changed. At the beginning of the "listed company + PE" model, it was expected that the M&A fund would be the link between the listed company and the funders. On the one hand, it would improve the efficiency of M&A of listed companies, on the other hand, the PE side could lock out the exit channel through M&A. However, in recent years, with the rapid development of industrial funds, the negative voices of zombie funds, insider trading and subject matter hype are constantly heard in the market. Therefore, the "listed company + PE" model has been questioned.

    "In the past two years, many companies engaged in industrial merger and acquisition funds have been speculating purely for the purpose of chasing hot spots and stimulating stock prices. In any case, the mode of listed companies + PE is to leverage big leverage with small capital. The cost of scale of investment is often relatively low, and the number of projects that can be invested in the end is not large. An unnamed securities analyst talked with reporters about that as an innovative model, listed company + PE still has many defects. For example, in the process of contacting projects, PE institutions, as fund partners, will inevitably grasp the inside information of listed companies, and even know the target and direction of future mergers and acquisitions, which makes it difficult to avoid the problems of insider trading and interest transmission, which provide difficulties for supervision.

    In recent years, the scale of industrial fund development has been expanding, while the supervision of this new model of inquiry has been further strengthened. A spokesman for the Securities Regulatory Commission (SFC) has made it clear in public channels that the investment model of "listed companies + PE" should further strengthen policy guidance and encourage it to play a positive role in the industrial transformation and upgrading of listed companies. At the same time, in order to prevent market manipulation, insider trading, profit transmission and other phenomena that may occur in the investment model, we will strengthen supervision and severely crack down on market manipulation, insider trading and other illegal acts. In addition to gradually strengthening the supervision, listed companies + PE mode also faces the dilemma of finding projects and exiting.

    According to the above-mentioned analysts, the model of "listed company + PE" should satisfy the interests of listed companies, PE institutions and standard parties. At present, there are many kinds of investment funds in society, and the high-quality projects in hot industries are often the seller's market. It is more difficult for industrial M&A funds to successfully capture high-quality resources at low cost, which is also the reason why many zombie funds have been inactive for many years. In addition, the common exit channels of industrial M&A funds are as follows: IPO, transfer to third parties, acquisition of listed companies and so on. With the tightening of merger and acquisition supervision and the introduction of new rules to reduce holdings, the time cost of exit through IPO has increased, and most listed companies are unwilling to invest more in acquisition of underlying assets to complete the exit of M&A funds. Therefore, the exit of industry buyout fund is also a difficult problem in the industry. How can we improve the fund's investment and launch mode while the +PE mode of listed companies continues to grow barbarism? How to avoid the risk of irregularities involved is still a problem to be explored and considered.