Ying Wenlu: The persistence and determination of 100 billion Yida Capital

"Macro has no eternal order, investment does not have an eternal city, and small probability events are constantly challenging everyone's cognition." Reflecting on the dark areas of cognition, turning crises into opportunities, and seizing development opportunities in black swan and gray rhino events are compulsory courses for investment institutions. ”

This is the opening paragraph of Ying Wenlu, chairman of Yida Capital, in his speech at the "15th China Investment Annual Conference and Annual Summit" held on May 13. It is true that the global capital market has been "changing" in the past year, from the pessimism under the impact of the new crown epidemic at the beginning of the year, to the strong rebound of the world's major capital markets, to the good projects after the second half of 2020 being robbed and valuations soaring, all of which are difficult to predict.

After this speech on "change", Ying Wenlu had a wonderful dialogue with The Investment Network. In the dialogue, Ying Wenlu did not talk about changes anymore, but talked about "perseverance" and "concentration". In this era of great changes, how does the core management team precipitate for more than 20 years and manage yida capital with a management scale of hundreds of billions of yuan through the cycle?

Without TAKING IPOs as the investment vane, it is only a matter of time before good companies go public

On May 13, Seihang Co., Ltd. (SZ.001205) was listed on the main board of the Shenzhen Stock Exchange, and Mai Xinlin (SH.688685) was successfully listed on the Science and Technology Innovation Board, which was double-sounded in one day, and the sea and air were reflected, and these two enterprises engaged in navigation and aviation business respectively also became the 10th and 11th IPO projects of Yida Capital in 2021. It is worth mentioning that in 2020, 20 invested enterprises of Yida Capital have realized securitization, of which 19 projects have achieved IPOs or IPO meetings, and the amount allocated to fund investors has exceeded 4 billion yuan throughout the year. It seems that the withdrawal tide of Yida Capital in 2021 will continue.

However, in the face of such a beautiful exit figure, Ying Wenlu told the investment network: "Yida Capital pays attention to both the IPO and the IPO. "Although there are many IPOs this year, the employees of Yida Capital have no intention of carnival at all. Since the former jiangsu high-tech investment group, the management team of Yida Capital has experienced more than 20 years of market ups and downs, and has long been accustomed to the ups and downs of the IPO speed.

Since last year, the entire industry has been immersed in the IPO carnival, but Ying Wenlu is more willing to talk about staying calm in the dialogue. Ying Wenlu said that the outside world looks at the venture capital industry most concerned about a project and makes a lot of money, coupled with the rendering of the investment institutions themselves and the media, so that the listing seems to be a carnival. But Ying Wenlu believes: "This industry should not be like this, and slowly everyone will taste that this industry is a fine craftsman's work, not easy to do well, and it is an industry that 'can't take porcelain work without diamonds'." ”

Ying Wenlu has been reminding Yida Capital not to use the IPO as a vane for investment, and not to be led by the rhythm of the IPO.

Since 2021, the IPO review policy of the Science and Technology Innovation Board has changed, especially the wave of withdrawals triggered by on-site inspections has attracted widespread attention. The industry is also very concerned about whether the IPO is tightened and whether the investment strategy should be adjusted accordingly. Ying Wenlu's view of this is also to remain calm.

"As an investment institution, you must pay attention to changes in IPO policy, but don't try to grasp the rhythm of IPO. Investment must have long-term thinking, and the first criterion is whether the invested enterprise is good or not. As for whether the listing time is one year faster or one year slower, it doesn't matter at all. If you find that the IPO is fast, you will grasp the investment, and if the IPO is slow, you will invest slowly, then it is not a mature investment institution. Ying Wenlu explained.

The more expensive the valuation, the more you have to stay fixed

Partly because of the wealth effect of IPOs, the valuation level of the primary market has soared overall since the second half of 2020. Almost all institutions, large and small, are lamenting that valuations are expensive. At the "15th China Investment Annual Conference and Annual Summit", some bigwigs bluntly said that the madness of the market was "unprecedented in twenty years".

Ying Wenlu believes that there are two main reasons for the valuation. The first reason is that the registration system has opened up the primary and secondary markets, resulting in an increase in the valuation of the primary market. The second reason is that there is still a shortage in some industries, and the certainty of future development is high, so a lot of money is pouring in, such as semiconductors and biomedicine.

In the past ten years, China's venture capital industry has experienced many similar heats, from the Hundred Regiments War, Internet finance, medical beauty to new energy vehicles and so on. In every market boom, although a few unicorns have run out, most of the investment has been the "denominator". In the face of an overheated market, the way for investment institutions to deal with it is still two words in Ying Wenlu's view: concentration. Ying Wenlu used four "sticking" in a row to explain The strategy of Yida Capital: adhering to the concept of "serving investors", adhering to value investment, adhering to IRR, and adhering to DPI.

Ying Wenlu used the "old driver" as a metaphor for Yida Capital: the longer you drive, the more stable you drive, and you pay more and more attention to sudden and accidental events. For the phenomenon of "making payments without doing due diligence", Ying Wenlu has seen more than one round. But no matter how hard the peers grab it, Yida Capital is still those two words: concentration. Ying Wenlu said: "Judge for yourself if you are expensive and cheap. There are some star projects that are a bit outrageous, and we stay away from it. Looking back later, [the institutions that invested] didn't necessarily make a fortune. ”

In Ying Wenlu's view, as an investment institution, investment is never measured by the valuation, or it depends on the intrinsic value and future growth of the enterprise. Seeing "landscapes" that others can't see is an ability, and even in a generally overheated market, not all stages, all areas, all projects are expensive. Rational investors and rational entrepreneurs will choose the right way to deal with valuation problems, and the most feared thing is to be "dizzy" by the virtual fire and chaos.

The scale of 100 billion is just the starting point

Yida Capital, which has the word "stable", has a management scale of more than 100 billion yuan in 2019, becoming one of the few venture capital institutions in China to join the "100 billion club". In the past few years, it has become more and more difficult to raise funds in the domestic primary market, but Yida Capital has never made any worries in fundraising, And Ying Wenlu told The Investment Network: "The amount of fundraising mainly depends on our own rhythm. ”

Compared with the development goal of Yida Capital, the scale of 100 billion is only a starting point. "The shortcomings of emerging industries and the import substitution of industries, we all have to go to the layout, and the money will never be enough." At the current scale, we have not felt a lot of investment pressure. Ying Wenlu said.

Sitting on the scale of 100 billion, but saying that the money is not enough to spend, this is not Yida Capital in "Versailles".

In the past two years, the domestic venture capital industry has been reshuffled, the head institutions have risen, and the market ecology has undergone great changes. Ying Wenlu said that the "inflation" of the primary market is obvious, and now the number of investments and the investment intensity of individual projects have increased, and in the past, it may only cost to spend more than a billion yuan to invest in dozens of projects, and now investing in more than ten projects is often tens of billions. In addition, we must also consider the development and upgrading of the industry, such as semiconductors, biomedicine and other large money-burning households, no one dared to invest in the past, and now it is a key track.

As early as 2014, when Ying Wenlu led the Jiangsu high-tech investment team to restructure and establish Yida Capital, he had a very long-term plan for the future. Ying Wenlu and the team "did not sleep well for three days and three nights" to study the future layout and development. One of the major focuses of their research is the organization and culture of old American PE such as Blackstone, and the valuable parts are introduced.

Since then, benchmarking with overseas PE such as Blackstone, KKR, Carlyle, and Apollo has become a long-term practice of Yida Capital. Ying Wenlu revealed that until now, the Yida Capital team will dynamically track them on a "weekly" frequency. Every six or one year, a comparison chart between Yida Capital and them will be made, "telling us which places have room to catch up and where to learn.".

Compared with these international veteran PEOs, including Yida Capital, the scale of China's head investment institutions is indeed not large. Blackstone, for example, has surpassed $600 billion and has proposed a goal of increasing to trillion dollars!

If we look at the long term, Ying Wenlu believes that the process of heading China's equity investment market is far from over. The next ten years will be a very important decade, and Ying Wenlu believes that there will be a number of head institutions with a scale of 300 billion to 500 billion yuan.

Especially considering that the current domestic equity investment market is dominated by VC, the US big PE has long developed into a comprehensive alternative asset management institution, with business covering VC, mergers and acquisitions, real estate, credit and other fields. As the capital market gradually enters the stock era after the reform of the registration system, China's equity investment institutions are likely to need to go beyond the simple VC format. This will place greater demands on the size of the fund.

As early as 2014, Yida Capital set up Yida Huijing to engage in real estate business. In 2017, Yida Capital introduced the investment team of the leading domestic securities investment bank to jointly establish Yida Rongjing, focusing on long-term equity investment (PIPE investment) and M&A investment business of listed companies. Ying Wenlu believes that the capital market is still an incremental market for issuance, and in the case of the stock economy era, mergers and acquisitions will become the new normal, he frankly said, "At that time, some adjustments will be made to the playing style." If we can prepare the M&A team as early as possible, improve the M&A capabilities, and have a good understanding of the M&A industry, there may be good opportunities in the future."

The long-term competitiveness of institutions is not to look at the number of IPOs in a certain field and the size of a certain amount of funds raised, but to see whether the corporate culture and values have been well inherited, and whether there is a group of excellent and stable partners and reserve forces. In Ying Wenlu's view, since the establishment of Yida, one of the most successful decisions was to establish a partnership system. The partnership system is not a capital partnership, but a heart and mind, a group of like-minded people to go all out for the cause, the result must be worth looking forward to.