China Fund News Wu Yu Amman
Towards the end of the year, big things continue.
On the morning of December 16, the news that Wang Chaoyong, a veteran private equity tycoon of tens of billions, had been missing for two weeks, blew up the entire venture capital circle. Subsequently, Beijing Xinzhongli Investment Co., Ltd., founded by Wang Chaoyong, also issued an announcement on the matter, saying that the disappearance of contact has yet to be confirmed.
In the evening, the letter 833858 announced that the company had contacted Wang Chaoyong and his family through various channels since it learned of the relevant reports until the announcement was disclosed, but no effective contact had been made. On the same day, the company consulted the public security organs on the relevant situation, but as of now, it has not obtained valid information related to Wang Chaoyong. Up to now, the company has not received a formal notice issued by the public security, judicial and other organs or requests to assist in the investigation. At present, the company's daily operation and management work is operating normally, except for Wang Chaoyong, the management and employees of various departments are performing their duties normally.
Tens of billions of private equity tycoons were exposed to be missing
Near noon, The Fund Jun obtained a picture from insiders showing that Wang Chaoyong had been criminally detained by the Chaoyang Branch of the Beijing Municipal Public Security Bureau on November 30, 2021, on suspicion of embezzlement of his duties, and was now detained in the Chaoyang District Detention Center, which has not yet been confirmed.
According to brokerage China, Wang Chaoyong's last WeChat message was posted on November 29, "I hope to have liquidity, and I should use the platform of the Beijing Stock Exchange." "No more updates in the whole of December.
The fund Jun checked Wang Chaoyong's Weibo, sitting on 5.25 million followers, since October 19 forwarded the news of the Beijing Stock Exchange, there has been no update.
The letter responded publicly: The disappearance of the actual controller has yet to be confirmed
On the morning of December 16, Beijing Xinzhongli Investment Co., Ltd., a company listed on the New Third Board, issued an announcement suspending trading, saying that according to media reports, the company's actual controller Wang Chaoyong was missing, and the relevant situation has yet to be confirmed. The Company will complete further disclosure based on the confirmed information. Trading in the letter has been suspended since 16 December 2021 and trading is expected to resume by 29 December 2021.
There are multiple problems with the tens of billions of management scale
Where will the tens of billions of funds go after the loss of contact?
According to public information, Wang Chaoyong is the founder of Beijing Xinli Investment Co., Ltd.
Xinli is one of the earliest established VC/PE institutions in China, and according to the China Foundation Association, Xinli was established in June 2012, registered in 2015, and now has a management scale of more than 10 billion. As of the end of 2020, there were 36 funds under management in Xinli, with a cumulative subscription scale of 16.125 billion yuan and a paid-up scale of 11.201 billion yuan.
The latest information of the China Foundation Association shows that there are overdue and unliquidated funds in the letter and funds that have been in liquidation for a long time.
On April 19, 2021, the institution was ordered by the Beijing Securities Regulatory Bureau to make corrections, involving violations of the fund partnership agreement, inadequate management of investor appropriateness, commitment to minimum returns, and failure to disclose major litigation and equity freezing matters in a timely manner.
Now, if Wang Chaoyong is missing, where will the tens of billions of funds in his hands go? It has attracted much market attention.
Once known as the "Prodigy of Wall Street"
The letter is actually controlled by Wang Chaoyong and his wife, and as of mid-2021, the two directly hold more than 55% of the shares. In October 2015, Xinzhongli listed on the New Third Board as the "First Stock of China's Returnee Venture Capital". Wang Chaoyong and his wife Li Yifei were once regarded as the "golden boy and jade girl" in the investment industry.
Wang Chaoyong was admitted to Huazhong University of Science and Technology at the age of 15, became a graduate student of the School of Economics and Management of Tsinghua University at the age of 19, studied in the United States at the age of 20 and obtained an MBA degree, and began to perform his duties on Wall Street at the age of 22, becoming the first batch of investment and financing experts for mainland students to enter Wall Street. With 12 years of international investment experience, he has worked for JPMorgan Chase & Co. Bank, Standard & Poor's, Morgan Stanley, vice president of Morgan Stanley Asia, and chief representative of The Beijing representative office.
From 1998 to 1999, Wang Chaoyong was invited by the China Development Bank to serve as a full-time senior consultant and participated in the preparation and establishment of the investment banking business of the China Development Bank.
In May 1999, the 34-year-old Wang Chaoyong founded Xinli Capital, which has invested in well-known companies such as Sohu, Baidu, and Huayi Brothers, and has been praised by the media as a "Prodigy of Wall Street".
Listed with 16 times leveraged financing
Multiple bursts encountered Waterloo
Market analysis, Wang Chaoyong from the "Wall Street magic" to today's missing contact, originated from 2016, Wang Chaoyong 16 times leverage high premium holding Huicheng Technology, after which the company's performance was poor, the stock price fell year after year. The tide of broken capital chains, after experiencing several consecutive explosions, finally came to the point of exhaustion.
Here's the thing: Six months after the letter was listed, in May 2016, it spent 1.65 billion yuan in cash to acquire 11.1% of the shares of shell company Huicheng Technology at a high premium, a premium of 113.7% compared to the stock price of Huicheng Technology at that time of 8.89 yuan.
According to media reports at the time, of the 1.65 billion yuan of acquisition funds, 1.2 billion yuan was raised by Xinli through the asset management plan of China Merchants Wealth Asset Management Co., Ltd. (hereinafter referred to as "China Merchants Wealth"), and 315 million yuan was borrowed from Xinli to Beijing Hengyu Tianze Investment Management Co., Ltd. at an interest rate of 12%. This means that he closed the listed company with 16 times leverage.
why? Initially, it was rumored to be hoping to build the then-hot "Jiuding model", but then it was stranded due to the tightening of financial regulatory policies, and Wang Chaoyong's plan to go public through a backdoor listing failed. As a result, the listed company once again acquired a high premium to enter the equally hot game industry and changed its name to Huicheng Technology.
In 2018, after the company acquired Docomon, it once reversed its losses and made a profit of 336 million yuan. Everything seemed beautiful. However, the game is also not easy to do. After a short period of stimulation, the performance was sluggish, coupled with the high acquisition premium of the game target, laying hidden dangers for the impairment of goodwill and the explosion of performance. However, in 2019, doraemon games failed to go online, resulting in a sharp decline in performance. As a result, the listed company also made a goodwill impairment provision of 890 million yuan to 1.1 billion yuan, and the net profit for the year was 130 million yuan, down 60% year-on-year.
In 2020, Huicheng Technology's performance is once again thunderous, and it is expected to lose 900 million yuan to 1.17 billion yuan for the whole year, of which the goodwill impairment provision for the subsidiaries acquired in the previous period is 890 million yuan to 1.1 billion yuan. Huicheng Technology pointed out that mainly because Doraemon was affected by the tightening of supervision in the game industry and the delay in product launch due to the impact of the epidemic, and the operating income and profit in 2020 fell sharply.
Judging from the performance of the secondary market, when Xinli's subsidiary acquired Huicheng Technology, the latter's stock price once rose to more than 15 yuan. However, since 2017, huicheng technology's stock price has been declining. As of the close of trading on December 16, 2021, huicheng technology stock price has fallen to 4.43 yuan / share. Compared with the original purchase price of Wang Chaoyong, it has been cut off.
Wang Chaoyong's mortgaged equity also frequently exploded:
On December 3, 2020, 690,000 shares held by Beijing Xinzhong Lippin Equity Investment Center (Limited Partnership) were liquidated by Jianghai Securities.
On January 28 this year, 14.22 million shares held by Zhongchi Huicheng were liquidated by Capital Securities, accounting for 1.77% of the company's total shares, due to touching the minimum standard for maintaining the guarantee ratio stipulated in the margin business contract.
In addition, Huicheng Technology has also issued announcements on the reduction of controlling shareholders and their concerted actors in the secondary market on many occasions.
From December 9 to December 11, 2020, Rizhao Huiyin Equity Investment Fund Management Partnership (Limited Partnership) reduced its shareholding in the Company by 1.10% through a centralized auction.
On December 14, 2020, Huicheng Technology issued an announcement that the company received a notice from the controlling shareholder and the actual controller on December 13 that the controlling shareholder is planning the transfer of control, and the number of shares to be transferred is 120 million shares, which is expected to account for 15% of the company's total share capital, and the transaction may involve a change of control of the company.
Just in July this year, Wang Chaoyong just resigned as the chairman of Huicheng Technology. On August 2, Xinli issued an announcement that the proportion of Huicheng Technology held by Zhongchi Huicheng had dropped to 5.77%, making it the second largest shareholder of Huicheng Technology.
Because it is suspected of using the assets of the fund for the transfer of benefits
He was punished by the Beijing and Qingdao Securities Regulatory Bureaus
Since the beginning of this year, the products of Xinli have been repeatedly punished by local securities regulatory bureaus.
On April 25, the Beijing Securities Regulatory Bureau disclosed its decision to order corrections to administrative regulatory measures against Xinli Equity Investment Management Co., Ltd. After investigation, the Beijing Securities Regulatory Bureau found that Xinli Equity Investment Management Co., Ltd. had the following behaviors: using the convenience of fund property or position to seek benefits for people other than himself or investors and convey benefits. The above conduct violates the provisions of Article 23 (3) of the Interim Measures for the Supervision and Administration of Private Equity Investment Funds (Order [No. 105] of the China Securities Regulatory Commission, hereinafter referred to as the "Interim Measures"). Pursuant to Article 33 of the Interim Measures, the Beijing Securities Regulatory Bureau decided to take administrative supervision measures against the company to order corrections.
According to the news of the Qingdao Securities Regulatory Bureau on November 9, the Qingdao Securities Regulatory Bureau took corrective regulatory measures against Qingdao Xinli Shaohaihui Gaochuang Investment Management Co., Ltd. Recently, the Qingdao Securities Regulatory Bureau conducted an on-site inspection of the company's private fund business. After investigation, the company has the following problems: First, using the convenience of fund property or position to seek benefits for people other than itself or investors, and to convey benefits. The company violated the provisions of the fund partnership agreement by pledging the assets of the fund to provide financial support to related parties. Second, the appropriateness management of investors is not in place. Some investors do not have proof of financial assets or income, and they are not employees of your company, which is not enough to prove that the investor is a qualified investor in private equity funds. Third, promise investors a minimum return. Some fund product promotion materials have expressions such as "conservative" and "investment return forecast". The above conduct violates the relevant regulations of the CSRC.
In this regard, the Qingdao Securities Regulatory Bureau proposed: Qingdao Xinzhongli Shaohaihui Gaochuang Investment Management Co., Ltd. should attach great importance to it, conscientiously study relevant laws and regulations, take effective measures to actively rectify, and submit a written report to our bureau before December 9, 2021.