Rebirth of domestic M & A funds In 2011, four funds were raised or planned to be established (VC310)

In recent years, China's steel, aviation, telecommunications, coal, and pharmaceutical industries have undergone large-scale integration. The capital required for mergers and acquisitions is often billions or even tens of billions. However, in the M & A process, it is difficult for M & A projects to obtain financial support. In response to this obstacle, exploring the establishment of merger and acquisition funds is becoming the first touchstone for broadening financial channels and opening barriers to corporate merger and acquisition capital.

Large merger and acquisition funds compete to set up

The development of M & A funds in the country is quite tortuous, and a small climax was formed in 2008. However, affected by the financial crisis in 2009, a total of 3 M & A funds in China completed fundraising in that year, raising a total of US $ 2.299 billion. 85.9%. According to incomplete statistics, there have been at least four M & A funds that have completed fundraising and planned to be established since 2011, involving fundraising of nearly 20 billion yuan.

Since the beginning of 2011, it has been reported that the CSRC is working with relevant departments to establish an M & A fund to further support corporate M & A and reorganization activities. This news has finally come to light in recent days. As the first PE pilot of a brokerage direct investment company, CICC's first raised "CICC Jiatai Industry Integration Fund", the scale approved by the regulatory authority is 5 billion yuan, and the first phase has been completed a few days ago. Raised, the first phase of funds reached 1.5 billion yuan. According to insiders of CICC, CICC Jiatai focuses on industries such as consumer, medical, financial and advanced manufacturing. Compared with investing in some growth companies before, the fund is more focused on mergers and acquisitions related to industrial integration.

In May 2011, the first energy-saving and environmental protection industry M & A fund in Shenzhen, Zhongneng Green Fund, was announced. The fund size was 2 billion yuan.

The market has spawned overseas M & A funds

It is not only aimed at domestic industry mergers and acquisitions, but overseas mergers and acquisitions that have soared in recent years are also important for M & A funds. According to the latest data from the Ministry of Commerce, from January to May 2011, China's foreign direct investment through mergers and acquisitions reached US $ 8.5 billion, accounting for 41.8% of China's total foreign direct investment during the same period. According to observations, there are more than a dozen mergers and acquisitions supported by equity investment institutions. For example, Siyuan Brokers, with the support of CDH, acquired 92% equity of Xingyan Real Estate for 23 million yuan.

In mergers and acquisitions, the amount of capital required is often billions or even tens of billions. Such a large amount of capital makes China's M & A funds seek breakthroughs in the bottleneck.

In March 2011, the second Japanese merger and acquisition fund of CITIC Group's private direct investment company raised funds, and the subscription capital totaled 18 billion yen. Like the first Japanese M & A fund, the fund's goal is to acquire Japanese companies that have large-scale business or growth potential in the Chinese market.

According to the latest market news, an overseas M & A fund led by Shanghai International Group, with a scale of 10 billion yuan, is also in the process of preparation, and the final scale may reach 10 billion yuan.

M & A funds coincide with opportunities for development

Industry insiders believe that industrial mergers and acquisitions funds coincide with development opportunities. On the one hand, with the increasingly strict listing review and limited listing opportunities, some venture capital and private equity are adjusting their thinking to more flexible mergers and acquisitions as the main exit method. This is a great opportunity for the development of M & A funds.

On the other hand, in the past two years, overseas mergers and acquisitions of enterprises have repeatedly broken down. Market participants believe that the investment of domestic funds in overseas projects, whether it is the cost of capital or the complexity of the process, is much higher. Having overseas merger and acquisition funds to invest together can reduce Chinese companies going out Capital pressure.

However, some insiders believe that there are four major problems in the development of domestic M & A funds: difficulty in obtaining control of the enterprise, narrow financing channels for M & A funds, poor exit channels for M & A funds, and weak integration management capabilities of M & A funds. Liu Zhao, executive general manager of CICC Jiacheng Investment Management Co., Ltd., said that the M & A fund's industry development in China is estimated to take 3 to 5 years.

Glossary

M & A Fund

M & A funds are actually a business form of PE funds, corresponding to growth funds, which are quite common in mature foreign markets. Well-known PE funds such as KKR will look for companies that are undervalued in the capital market or have poor operating conditions but have potential, first to acquire and privatize them, and then to integrate and then re-list or sell to Other strategic investors to achieve profitable exit. Other funds engaged in mergers and acquisitions will form alliances with industrial capital to complete some costly mergers and acquisitions.

The above information source "Venture Investment" is authorized by the China Venture Capital Research Institute (CVCRI) to publish it. All rights reserved. Please indicate the source when reprinting. For more information, please click download to view all articles.
Contact number 400-609-6665 800-999-3099
E-mail: