Hillhouse has just announced: to buy back LONGi Green Energy, the proceeds will be handed over, and the newly raised funds of 6 billion yuan will increase the position of A-shares

Hillhouse's HHLR reduced its stake in listed company LONGi Green Energy to usher in the latest development.

On the evening of April 19, LONGi Green Energy announced that the company's shareholder HHLR Management Co., Ltd. increased its shareholding in the company through centralized bidding transactions, increasing its shareholding to 5%. In the "Simplified Equity Change Report", HHLR promised that it would take the initiative to continue to 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, the income will be owned by the listed company. In November last year, the China Securities Regulatory Commission (CSRC) decided to file a case against HHLR on suspicion of violating restrictive regulations by transferring LONGi Green Energy shares.

Since the end of August last year, the China Securities Regulatory Commission and other regulators have stepped up supervision of illegal shareholding reductions. For illegal shareholding reductions, the CSRC first ordered corrections and required the relevant entities to repurchase and pay the price difference to the listed company. On April 12, the China Securities Regulatory Commission (CSRC) issued the latest Administrative Measures for the Reduction of Shareholdings by Shareholders of Listed Companies (Draft for Comments), which further solidified this measure. It is clarified that measures such as "ordering the repurchase and paying the price difference to the listed company" can be taken for illegal shareholding reductions, increasing regulatory measures such as regulatory talks and issuing warning letters, refining the specific circumstances that should be punished, and increasing the intensity of cracking down on illegal shareholding reductions.

In addition, HHLR Management Co., Ltd. has recently raised a secondary market investment fund with a scale of about 6 billion yuan, which will increase the proportion of China's asset allocation and continue to invest in the A-share market.

Increased stake in LONGi Green Energy to 5%

According to LONGi's announcement, HHLR Management Co., Ltd. used the account of "HHLR Management Co., Ltd. - China Value Fund (Exchange)" to increase its holdings of 1,281,300 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%.

On the evening of November 8, 2023, LONGi Green Energy announced that the company's shareholder HHLR Management Co., Ltd. received a notice issued by the China Securities Regulatory Commission (CSRC) that HHLR Management Co., Ltd. was suspected of transferring LONGi Green Energy shares in violation of restrictive regulations, and the CSRC decided to investigate it.

HHLR Management Co., Ltd. said in its latest announcement 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 Management Co., Ltd. said that it will continue to strengthen the study of laws, regulations and normative documents to serve the high-quality development of China's capital market.

HHLR Management Co., Ltd. has also made it clear that there is no disclosed but uncompleted plan to increase or reduce its shareholding in the listed company other than the above-mentioned shareholding plan.

Participated in the refinancing securities lending business

HHLR Management Co., Ltd. is an investment entity focusing on the secondary market under Hillhouse Capital, a well-known investment institution. In December 2020, the shareholder acquired about 6.00% of the shares of LONGi Green Energy at a price of 15.841 billion yuan. Since the first quarter of 2021, HHLR Management Co., Ltd. has entered the list of the top 10 shareholders of LONGi Green Energy, with a shareholding ratio of 5.85%, and this shareholding ratio has been maintained until the fourth quarter of 2022.

On March 21, 2023, LONGi Green Energy issued a "Reminder Announcement on Shareholders' Participation in Refinancing Securities Lending Business and Changes in Equity". According to the announcement, in order to improve the efficiency of asset management and achieve asset appreciation, on March 20, HHLR Management Co., Ltd. participated in the refinancing securities lending business, lending 64.4846 million shares of LONGi held by it, accounting for 0.85% of the latter's total share capital.

The so-called refinancing securities lending refers to the business in which the securities lender lends the securities of a listed company to the securities borrower through the comprehensive business platform of the stock exchange at a certain rate, and the borrower returns the borrowed securities and the corresponding rights and interests compensation when due, and pays the expenses.

The announcement also revealed that HHLR Management Co., Ltd. plans to continue to use its shares holding no more than 0.15% of the company's total share capital to participate in the refinancing securities lending business in the next 90 days, with a lending period of no more than 182 days, that is, it will be recovered around September 20, 2023.

According to the announcement, HHLR's participation in the refinancing securities lending business this time is not a share reduction, will not touch the tender offer, the company's controlling shareholder and actual controller will not change, and the shares involved will be recovered after the expiration of the loan period. At the same time, the announcement information revealed that "after the completion of this equity change, the information disclosure obligor (HHLR) is no longer a shareholder of more than 5% of the listed company".

According to LONGi's 2023 first quarter report, HHLR Management Co., Ltd.'s stake in LONGi Green Energy decreased by 75.8146 million shares, and the number of shares held decreased to 368 million shares, accounting for 4.85% of the total share capital.

However, the shareholding changes announced by LONGi Green Energy in the third quarter of 2023 have pushed HHLR Management Co., Ltd. to the forefront of public opinion.

LONGi's third quarter report for 2023 shows that HHLR Management Co., Ltd.'s shareholding in LONGi Green Energy has dropped from 5.85% before the loan to less than 5%, and its shareholding ratio at the end of the third quarter of 2023 was 4.98%, with about 378 million shares.

On November 8, 2023, LONGi Green Energy announced that in accordance with the Securities Law of the People's Republic of China, the Administrative Punishment Law of the People's Republic of China and other laws and regulations, the China Securities Regulatory Commission decided to file a case against HHLR Management Co., Ltd., a shareholder of LONGi Green Energy, due to the suspected transfer of LONGi Green Energy shares in violation of restrictive regulations.

Comprehensively improve the system of rules for reducing holdings

Since the end of August, regulators such as the China Securities Regulatory Commission have stepped up their efforts to supervise illegal reductions. In the new "National Nine Articles" released on April 12, it is clearly proposed to comprehensively improve the system of rules for reducing holdings. Issued measures for the management of shareholding reduction of listed companies, and implemented policies for different types of shareholders. Strictly regulate the reduction of shareholdings by major shareholders, especially controlling shareholders and actual controllers, and resolutely prevent all kinds of detours from reducing shareholdings in accordance with the principle of substance over form. Order the violating entity to repurchase the shares that have been reduced in violation of the regulations and pay the price difference. Crack down on all kinds of illegal reductions.

On the same day, the China Securities Regulatory Commission (CSRC) solicited public opinions on the Administrative Measures for the Reduction of Shareholdings by Shareholders of Listed Companies (hereinafter referred to as the "Measures"), upgraded from a normative document to a regulation, further enhanced the stability and binding force of the system, and simultaneously revised the "Rules for the Management of the Company's Shares Held by Directors, Supervisors and Senior Managers of Listed Companies and Their Changes".

Guo Ruiming, director of the Department of Supervision of Listed Companies of the China Securities Regulatory Commission, said that since last year, the China Securities Regulatory Commission has first ordered corrections for illegal reductions, requiring relevant entities to repurchase and pay the price difference to listed companies. For those who have a relatively large amount, serious circumstances or refuse to make corrections, they shall be punished and market discipline shall be strictly enforced.

In addition, the Measures also increase the obligations of the company and the secretary of the board of directors, requiring the company to remind shareholders of the rules, requiring the secretary of the board of directors to regularly check the shareholding reduction of shareholders and take the initiative to report illegal shareholding reduction, which is conducive to strengthening the management of shareholder shareholding reduction.

Hillhouse raised 6 billion yuan to increase its position in A-shares

While increasing its stake in LONGi Green Energy, HHLR Management Co., Ltd. has raised a secondary market investment fund with a scale of about 6 billion yuan. According to the relevant person in charge of HHLR Management Co., Ltd., the company will increase the proportion of China's asset allocation and continue to invest in the A-share market.

As Hillhouse's independent US dollar secondary market investment management platform, HHLR was incorporated in Singapore in 2007 and obtained QFII qualification with the approval of the China Securities Regulatory Commission in 2012.

According to the Securities Times reporter, HHLR's historical holdings in A-shares include well-known listed companies such as CATL, Zijin Mining, Gree Electric, and Wanhua Chemical.

In addition, HHLR also has a heavy position in Chinese concept stocks in the U.S. stock market. According to data from the U.S. Securities and Exchange Commission (SEC), the total market value of HHLR Advisors' holdings in the U.S. stock market in the fourth quarter of last year was US$4.962 billion, an increase of 10.7% from the end of the third quarter of last year.

Specifically, in the fourth quarter of last year, HHLR Advisors increased its holdings in e-commerce technology companies such as Pinduoduo, Amazon, and JD.com. Danaher, a first-time HHLR Advisors top 10 heavyweight, is a world-renowned innovator in life sciences and medical diagnostics who specializes in driving sustainable competitive advantage through lean management and operational excellence. As of the end of the fourth quarter of last year, HHLR Advisors held 1.011 million shares of Pinduoduo, an increase of 276,000 shares from the end of the third quarter of last year.

Market participants believe that under the current circumstances, Hillhouse's increase in A-shares not only reflects Hillhouse's determination to continue to invest in China, but also helps to activate the market and boost investor confidence.

Editor-in-charge: Wan Jianyi

Proofreading: Peng Qihua

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