Interface News Reporter | Dragon power
After a lapse of more than five months, HHLR, a subsidiary of Hillhouse, which had attracted much attention, was investigated for reducing its stake in LONGi Green Energy (601012.SH) through a refinancing bypass, and finally ushered in new progress.
On the evening of April 19, LONGi Green Energy announced that HHLR increased its holdings of 1.2813 million shares of LONGi Green Energy through centralized bidding on April 19, resulting in an increase in its shareholding ratio from 4.98% to 5.00%.
HHLR stated in the "Short Form Report on Changes in Equity" that it has actively cooperated with the investigation of the China Securities Regulatory Commission (CSRC) since receiving the notice of filing. In accordance with the spirit of supervision, it is committed to actively increase its holdings of LONGi Green Energy shares with self-raised funds, and complete the repurchase of all the shares of the target within the next one month, and if this part of the share repurchase involves the proceeds, it will be owned by the listed company. HHLR will continue to strengthen the study of laws, regulations and normative documents to serve the high-quality development of China's capital market.
According to the information learned by Jiemian News, in response to the above-mentioned investigation, the explanation given by Hillhouse Assets is that HHLR is a secondary market investment platform registered in Singapore, investing in A-shares through QFII, and an independent team.
What is the ins and outs of the matter? Jiemian News sorted out the specific situation of HHLR's position in LONGi Green Energy based on the relevant announcements released by LONGi Green Energy in the past and Wind data.
On December 19, 2020, Hillhouse Capital signed a share transfer agreement with Li Chunan, a shareholder of LONGi Green Energy, to acquire 226 million shares of the company held by the latter, and the transfer registration of the above shares was finally completed on February 4, 2021, so far, "Hillhouse Capital Management Co., Ltd. - China Value Fund (Exchange)" holds 226 million shares of LONGi Green Energy, accounting for 6.00% of the total share capital of LONGi Green Energy.
In the first quarter of 2021, Hillhouse Investment Management Co., Ltd. appeared in the top ten shareholders of LONGi Green Energy, and the number of shares held was still 226 million shares, but at that time, LONGi Green Energy had a certain change in share capital due to the conversion of convertible bonds into shares, so the shareholding ratio of Hillhouse Investment was changed to 5.85%.
In the 2021 annual report, the holding entity of the above-mentioned shares of Hillhouse was changed to "HHLR Management Co., Ltd. - China Value Fund (Exchange)" (hereinafter referred to as "HHLR Company"), and the shareholding ratio remained at 5.85%, and this proportion continued until the 2022 annual report.
On March 21, 2023, LONGi Green Energy announced that on March 20, HHLR participated in the refinancing securities lending business of 64,484,600 shares of listed companies held by HHLR, accounting for 0.85% of the total share capital of the listed company, and the lending period was 182 days. As a result of this equity change, HHLR's shareholding in the listed company has been reduced from 5.85% to 5.00%, and after the completion of the equity change, HHLR will no longer be a shareholder of more than 5% of the listed company. At the same time, HHLR also plans to continue to use its shares of no more than 0.15% of the total share capital of the listed company to participate in the refinancing securities lending business in the next 90 days.
According to the first quarter and interim reports of 2023, HHLR's shareholding in LONGi Green Energy has decreased from 5.85% at the end of 2022 to 4.85%. Among them, the interim report shows that HHLR lends 75,814,600 shares it holds through refinancing and lending business. In the third quarterly report disclosed in the same year, it was clearly mentioned that "as of the end of the reporting period, all the shares lent by HHLR through refinancing have been returned at maturity", but HHLR's shareholding ratio only increased slightly to 4.98%.
In other words, when HHLR's shareholding ratio fell below 5% during the refinancing period, it reduced its stake in about 0.87% of LONGi Green Energy's total share capital, and did not issue an announcement to reduce its shareholding during the period. After the official disclosure of the relevant data, whether HHLR's reduction of LONGi Green Energy through refinancing "detour" is reasonable has become the focus of market attention.
In this regard, some market participants believe that there is a certain controversy in the determination of 5% ownership. At the time of the refinancing, the voting rights and dividend rights had been transferred, and the loaned shares were registered in the name of China Securities Finance Company. It was only after the case was filed that the exchange amended the relevant rules for refinancing, and the calculation of the loaned shares from the original rules under the name of the borrower, China Securities Finance Company, was revised to the consolidated calculation under the name of the investor (lender).
On November 8, 2023, LONGi Green Energy announced that HHLR was filed by the China Securities Regulatory Commission (CSRC) on suspicion of transferring LONGi Green Energy shares in violation of restrictive regulations.
Table: HHLR's holdings in LONGi Green Energy
Data source: Wind, interface news
In fact, before HHLR's detour to reduce its stake in LONGi Green Energy was widely concerned, the phenomenon of shareholders of listed companies reducing their holdings through refinancing once caused heated discussions in the market.
Since October 14 last year, the China Securities Regulatory Commission (CSRC) has continued to adjust and optimize the system for securities lending and placing of shares by strategic investors
On January 28 this year, the China Securities Regulatory Commission (CSRC) further optimized the securities lending mechanism: first, it completely suspended the lending of restricted shares, and second, adjusted the market-based declaration of refinancing securities from real-time availability to next-day availability, restricting the efficiency of securities lending and lending. Due to factors such as system adjustments. The first measure has been in effect since January 29 and the second since March 18.
On February 6, the spokesperson of the China Securities Regulatory Commission pointed out in response to a reporter's question, "After research, it has been decided that I will propose three measures to further strengthen the supervision of the securities lending business: first, suspend the scale of new refinancing securities, with the balance of existing refinancing securities as the upper limit, suspend the scale of refinancing securities of new securities companies in accordance with the law, and gradually close the stock; Third, we will continue to strengthen supervision and law enforcement, and we will crack down on illegal activities such as using securities lending transactions to carry out improper arbitrage in accordance with the law to ensure the smooth operation of securities lending and borrowing business. ”
On March 15, the China Securities Regulatory Commission issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)". It is proposed that it is forbidden to refinance and lend restricted shares, and shareholders of restricted shares to lend and sell securities, so as to prevent the use of "tools" to detour.
On April 12, the China Securities Regulatory Commission (CSRC) issued the 2024 legislative work plan, which mentioned two key projects to be introduced within the year, namely the revision of the "Administrative Measures for the Margin Financing and Securities Lending Business of Securities Companies" and the "Trial Measures for the Supervision and Administration of Refinancing Business".
In this context, the scale of securities lending in the A-share market has also dropped significantly. Wind data shows that from January 3 to October 13, 2023, the average daily balance of securities lending in the market was 93.099 billion yuan, and since then until April 19 this year, the average daily balance of securities borrowing and lending in the market has been 63.728 billion yuan, of which the single-day balance of securities lending in the market has not exceeded 50 billion yuan since February 8 this year.
Chart: Changes in the balance of A-share securities lending since 2023 (as of April 18)
Source: Wind
In addition, it is worth mentioning that in addition to the repurchase of LONGi Green Energy-related shares, market sources said that as Hillhouse's independent US dollar secondary market investment management platform, HHLR has raised a new fund with a scale of about 6 billion yuan, increased the proportion of China's asset allocation, and continued to invest in the A-share market.