Tsinghua Unigroup invested in Zhilu and Jianguang Assets, and Zhejiang State-owned Assets and Ali consortium failed

After nearly 1 year of negotiation and screening, Tsinghua Unigroup, which is heading for bankruptcy and reorganization, has finally determined the takeover party. A consortium of seven institutions, including Zhilu Capital and Jianguang Assets, defeated the Zhejiang State-owned Assets and Alibaba consortium and became a strategic investor selected by the insolvency administrator of Tsinghua Unigroup.

The legal process for initiating the restructuring is not strictly complete, but at this point, it is unlikely that there will be any changes in strategic investors.

Tsinghua Tsinghua Holding Group, China's largest school enterprise, is an important technology group with a wide layout in the field of semiconductors and cloud computing, with assets such as Tsinghua Unigroup (including important server manufacturers Xinhuasan), Tsinghua Unigroup Guowei, Yangtze River Storage, Tsinghua Unigroup Zhanrui, Tsinghua Unigroup Cloud and other assets, with an overall scale of nearly 300 billion yuan.

In November last year, Tsinghua Unigroup began to fall into multiple debt defaults because it could not repay the principal of a private debt of 1.3 billion yuan, triggering a subsequent bankruptcy restructuring.

According to media reports and public information such as Caixin, the restructuring working group began screening potential strategic investors at the beginning of this year, and after three rounds of competition, the last two investors were left by the end of October.

The winning JIANGUANG Assets (established in 2015) and Zhilu Capital (established in 2017) participated in the bidding as consortiums from the beginning; the former was actually controlled by China Jianyin Investment; the latter was actually controlled by Li Bin, a former senior executive of SMIC, who is also a shareholder of Jianguang Assets.

Li Bin is also the chairman of the Zhongguancun Rongxin Financial Information Industry Alliance (Rongxin Information), which includes Zhilu and Jianguang, as well as North Huachuang, Beijing Junzheng, Changdian Technology, SMIC, Weier Shares, Qualcomm (China), NXP (China), etc., including important state-owned enterprises, private enterprises and foreign branches in China's semiconductor market.

A well-known operation of Zhilu and Jianguang was to acquire the Dutch automotive semiconductor company NXP standard product business, rename it Nexperia Semiconductor, and then sell Nexperia Semiconductor to Wingtech Technology, an A-share listed company.

Earlier this month, Zhilu Capital acquired an interest in four factories in mainland China, the world's largest semiconductor packaging and testing company, for another US$1.46 billion.

Public information shows that Zhilu and Jianguang do not specifically operate semiconductor companies. This is similar to the previous role of Tsinghua Unigroup in the subsidiaries and sun companies - it is a holding company and does not participate in the daily operation of most of its subsidiaries.

The other bidder, Ali, first participated alone and then formed a consortium with Zhejiang state-owned assets. According to reports, after the first creditors' meeting in October, the debt scale determined by Tsinghua Unigroup has exceeded 100 billion yuan; the bankruptcy reorganization working group requires strategic investors to undertake the business of Tsinghua Unigroup as a whole and does not accept to take over separately.

Therefore, even if Ali successfully bids, it has both pros and cons. Its cloud computing business has a certain synergy with Tsinghua Unigroup's New H33 and Tsinghua Unigroup, but it lacks intersection with Tsinghua Unigroup Zhanrui, which makes mobile phone chips; and Tsinghua Unigroup also has a money-burning business such as Yangtze River Storage. Integrating them is not a small challenge for Ali. (Cheng Manqi, Ma Hui)