Wu Gang 10 years PE O xiong road to the end of the 100 billion Jiuding ended the market value of only 6.8 billion

Yangtze River Business Daily reporter Wei Du

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A generation of PE tyrants Wu Gang came to an end.

Recently, the major event that has caused a sensation in the financial circle is that Jiuding Wugang was investigated by the CSRC.

At the beginning of this year, Jiuding Holdings was fined 600 million yuan for manipulating the stock price. Both Wu Gang and Jiuding Group were fined.

Once upon a time, Wu Gang's enterprising behavior was an inspirational model. In terms of education, he became a graduate student at secondary school and a doctorate in finance at Peking University, known as Xueba. In his career, he spent 5 years to become the youngest director of the CSRC.

Around 2007, Wu just started his business and partnered with Huang Xiaojie, the youngest director of the central bank at the time, to establish Jiuding Holdings.

In less than 10 years, Wu Gang built Jiuding's financial holding group with amazing speed and obtained almost all financial licenses. It took 28 years for Ping An of China, headed by Ma Mingzhe, to gather all the financial licenses. With the help of the PE factory model, Wu Gang established the 100 billion Jiuding Empire.

However, in 2017, there was a crisis in the Jiuding Empire, and in 2018, the CSRC opened an investigation into the Jiuding Group, followed by a series of violations of laws and regulations.

Today, the market value of Jiuding Group is only 6.8 billion yuan, and the CSRC's investigation of Wu Gang has just begun.

Being fined and being investigated seems to mean that Wu Gang's 10-year PE gangster road has come to an end.

Director of the Securities and Futures Commission and private equity tycoon

Wu Gang's experience once circulated in the industry in a legendary form.

According to public sources, Wu Gang was born in 1977 in Tongjiang County, Bazhong City, Sichuan Province. In middle school, due to his family's poverty, he gave up high school and went to secondary school, but through self-study during the secondary school, he got a diploma in mathematics, a bachelor's degree in law and a bachelor's diploma in accounting, which can be called "academic bully". After graduating, he worked as an accountant at a cement factory in the town. During the day, he did accounting work and self-study at night, so Wu Gang was admitted to the graduate school of the Accounting Department of Southwest University of Finance and Economics, during which he won the qualification certificates of certified public accountant, appraiser and lawyer.

After graduating from graduate school, Wu Gang broke into the beach. First, he worked in Minfa Securities Investment Bank, during which he studied for a doctorate in finance at Peking University. More than a year later, probably feeling that he was not suitable for investment banking, he looked for a new way out.

In 2002, Wu Gang took the CSRC's recruitment examination that year. As a result, he took the first place in the country and successfully entered the Securities Regulatory Commission.

In the CSRC, he started from a section clerk and became a deputy director and director in just five years, becoming the youngest director of the CSRC at that time. For a time, the scenery is infinite. However, Wu Gang seems to be absent from his career.

In 2007, there was a long-lost bull market in the A-share market, and Wu Gang, who was in a position of supervision and deeply familiar with capital operation, realized the huge "gold digging" opportunity.

As a result, Wu Gang resigned from the enviable position of regulatory director and went to the sea to start a business. He pulled up Huang Xiaojie, the youngest director of the central bank at the time, and according to legend, the two borrowed 2.5 million yuan, rented a basement in Wudaokou, and established Jiuding Holdings, officially opening the curtain of Jiuding's expansion.

There are rumors that in the early days of entrepreneurship, Wu Gang's fundraising was not smooth, and at the time of crisis, a driver in Shaoxing had a chance and invested 7.5 million yuan, and Wu Gang's career was really started, and later added to 50 million yuan, becoming the first partner of Shanghai Kunwu Jiuding.

Whether the rumors are true or not cannot be verified, but it is certain that Wu Gang's Jiuding Holdings has developed rapidly. The reason for this is that Wu Gang broke the tradition of private equity laziness and laziness, aimed at those companies that were about to be listed, and quickly intervened in investment and equity at a higher valuation than other equity funds to seize the opportunity. At the same time, in the way of "sweeping the street", the equity investment factory is the first PE factory in the industry. The operating model of Jiuding Holdings was therefore known as the PE factory model.

In September 2009, the ChiNext board of the Shenzhen Stock Exchange was opened, the listing threshold was lowered, and Jiuding's early investment obtained rich returns.

In 2010, the first batch of stocks listed on the ChiNext board was lifted, and Jiuding ushered in a harvest period with huge profits. Statistics show that between 2005 and 2010, there were 14 Pre-IPO projects invested in Jiuding, of which BailiLian returned multiples of 16.5 times, Jifeng Agricultural Machinery returned 15.2 times, and Jinya Technology returned 25 times.

As a result, Jiuding became famous and famous, and the funds issued by Jiuding were sought after. At that time, Jiuding issued a new fund every 3 months, and the size of each fund was 5-1 billion yuan.

It was around 2010 that Jiuding was listed in the top three in a number of private equity rankings, and Wu Gang was called a PE predator.

Frenzied expansion of the 100 billion market capitalization empire

The Pre-IPO project made Jiuding very profitable and fueled Wu Gang's ambitions.

Here's your chance. In China, early private equity funds could not directly issue products, but could only borrow securities companies, trusts, fund subsidiaries, etc. In June 2013, the regulatory authority of PE was transferred from the NDRC to the CSRC. Since then, the Asset Management Association has issued the Measures for the Registration of Private Fund Managers and the Filing of Funds, which has opened the curtain of the era of "Sunshine Private Equity", and Sunshine Private Equity Funds can issue their own products.

In addition, in 2014, the problem of dammed lake of A-share IPOs was gradually solved, and IPOs returned to normal.

You can issue your own products, IPO normalization, Jiuding ushered in the peak moment.

In April 2014, Jiuding Group landed on the New Third Board and became the first private equity stock. Taking this opportunity, Jiuding intensive financing, from 10 billion to 15 billion yuan, and then to 30 billion yuan.

At the same time, Jiuding went public through the acquisition of A-share listed company Zhongjiang Real Estate through a backdoor listing and renamed it Jiuding Investment.

After the backdoor listing, Jiuding's expansion accelerated and was no longer limited to private placement. Through investment, etc., Jiuding has continuously obtained financial licenses. Specifically, it is manifested in the establishment of a third-party payment institution, Easy Pay, starting with the establishment of Jiutai Fund, holding Tianyuan Securities (that is, the current Kyushu Securities), holding Zhongjie Insurance Brokers, annexing Fortis Insurance, and entering the insurance field. In addition, Jiuding Investment has also invested in Internet financial lending treasures, etc., and participated in the planning of private banks.

In the expansion of the financial market, in addition to the bank license, Jiuding Investment has basically gathered all the financial licenses, and the financial holding group of the Jiuding Group has emerged.

If it is not investigated by the CSRC, Jiuding may have obtained a banking license, thus achieving a full financial license.

In the secondary market, the stock price of Jiuding Group was once as high as 970 yuan / share, with a market value of more than 100 billion, becoming the company with the highest market value of the New Third Board, and Wu Gang became the richest man in the New Third Board.

In the A-share market, the market value of Jiuding Investment once reached 33.7 billion yuan.

In terms of operating performance, in 2016, the net profit attributable to the shareholders of the listed company (hereinafter referred to as net profit) achieved by Jiuding Group and Jiuding Investment was 2.047 billion yuan and 628 million yuan respectively, reaching a historical peak.

Wu Gang was broken by Cha Jiuding

After 4 years, Wu Gang paid for his madness and crooked thoughts.

In 2018, Jiuding Group was investigated by the CSRC.

Originally, after the listing of Jiuding Group on the New Third Board, it successively planned to raise funds. Among them, in the second targeted issuance of shares in 2014, the company issued 574 million shares to 11 natural persons including 4 units including Jiuding Holdings, including Qian Guorong, Wang Erping, Zhang Zheng, Yi Bin, Feng Yuan (hereinafter referred to as Qian Guorong and other 5 people), with an issue price of 3.92 yuan per share and raised 2.25 billion yuan.

After the completion of the second offering, the total number of shareholders of Jiuding Group is 173, not more than 200, according to the relevant provisions of the exemption approval, the second directional offering does not need to apply to the CSRC for issuance approval. This was not the case, and the actual subscription of 335 shareholders was concealed. The operation method is that Jiuding Holdings will contribute capital and arrange five accounts to accept the second directional issuance of shares by Jiuding Group, and recover the fixed increase in capital contribution after transferring the shares to the 161 units and individuals of the real private placement in the five accounts.

Around May 2015, Wu Gang sold all the shares of Jiuding Group held by six securities accounts, making a profit of nearly 500 million yuan.

After two years of investigation, as a result, Jiuding Holdings was confiscated 500 million yuan and fined 100 million yuan.

In fact, even if it is not this time to manipulate the stock price overturn, Wu Gang and Jiuding's good days have come to an end.

At the end of 2017, the new asset management regulations "Draft for Comments" were issued, tightening the "Great Leap Forward in Asset Management" since 2012. The "New Asset Management Rules" and its series of supporting rules put forward important reform directions, namely breaking rigid exchange, prohibiting capital pools, restricting non-standards, restricting the mismatch of terms, implementing equal access, unifying leverage requirements, and encouraging subsidiarization operations.

This new regulation has a significant impact on private placements. At that time, some private fund management companies that carried out fixed income non-standard investments were protected by investors because they promised to protect the principal and interest when raising funds, but then could not pay them, and eventually the company collapsed.

Jiuding's Kyushu Securities has also been greatly affected. In 2016, the products issued by Kyushu Securities encountered expectations, and investors sought revenge from Jiuding, causing a storm.

It was also from this time that Wu Gang's crisis struck quietly.

From the perspective of operating performance, the net profit of Jiuding Group in 2017 was 1.154 billion yuan, down 43.95% year-on-year, a loss of 197 million yuan in 2018, rebounded to 1.256 billion yuan in 2019, and fell to 393 million yuan in 2020. The net profit of Jiuding Investment in 2017 and 2018 was 324 million yuan and 284 million yuan respectively, down 49.62% and 12.24% year-on-year, respectively, and in 2020, the net profit fell to 0.87 billion yuan, a year-on-year decline of 89.05%, and in the first half of this year, the net profit was 0.43 billion yuan, down again from the same period last year.

In the secondary market, the stock price of Jiuding Investment has fallen from 77.58 yuan / share at the beginning of the backdoor listing to 14.80 yuan / share today, and the market value is only 6.4 billion yuan. Jiuding Group's stock price fell from 970 yuan / share to 0.45 yuan / share, and the market value was only 6.750 billion yuan.

Today, Wu Gang has been investigated for allegedly violating the relevant laws and regulations of the fund.

The former private equity king fell, and the outside world wondered whether the Jiuding Empire created by Wu Gang and his hands was legendary or gray. Perhaps, as the results of the survey are announced, there will be an answer.