Jianxin Trust: The Rise of PE in a Banking System

A bank-affiliated private equity investment institution, how to do PE?

As a holding subsidiary of China Construction Bank, since its inception, CCB Trust has been constantly exploring the possibility of entering the VC/PE circle. Today, it has been 8 years since the private equity investment business, and the PE with bank background currently has a total management scale of nearly 100 billion yuan, of which 70% of the funds come from the high net worth and ultra-high net worth customers of China Construction Bank.

In 2017, Jianxin Trust began to raise funds in a comprehensive market, and a series of funds such as state-owned enterprise reform, scientific and technological innovation, and industrial leaders were established. Among them, the No. 1 product of the Science and Technology Innovation Fund was fully raised within one month, and "more than 100 high-net-worth customers, with a total investment of 800 million." Chen Quan, general manager of the M&A and Restructuring Division of Jianxin Trust, told the investment community (WeChat ID: pedaily2012).

This is a PE with technology investment as the main direction and adheres to long-term companionship. Seven years ago, Jianxin Trust invested in Qianfang Technology, and accompanied the company from a market value of 1 billion yuan to a market value of more than 30 billion yuan of giants, the original investment of 100 million yuan, for jianxin trust has brought rich returns.

Jianxin Trust has three main investment logics: continuous investment, ecological investment and advanced investment. In the past few years, Jianxin Trust has initiated dozens of funds, invested in nearly 100 projects, and continuously cooperated with industry giants such as Huawei, Xiaomi, and CATL to help China's advanced technology development.

Chen Quan, General Manager of the M&A and Restructuring Division of Jianxin Trust

From $100 million to $30 billion market cap:

Continued investment, Jianxin Trust accompanied the company for 8 years

Qianfang Technology, a leading enterprise in intelligent transportation, Jianxin Trust has accompanied it for 8 years.

Everything starts with the privatization of Qianfang Technology. Twelve years ago, in July 2008, Qianfang Technology landed on the NASDAQ capital market in the United States, becoming the first Chinese concept stock in the field of transportation informatization. Subsequently, in 2012, Qianfang Technology, which had a market value of more than $160 million at the time, was preparing to take private from the US stock market and seek to list in China. It was from this time that Jianxin Trust came into contact with it.

In October 2012, Qianfang Technology successfully delisted from the United States, and the following year, Jianxin Trust invested 100 million yuan and invested in Qianfang for the first time. Chen Quan combed through to the investment community: "Since the first investment in 2013, we have invested three times in the middle and exited three times, and now we have not completely withdrawn. This is one of the first batch of projects of Jianxin Trust to realize the whole process of investment from fundraising and investment management. ”

At the end of 2013, Qianfang Technology landed on A-shares through the backdoor Lianxin Yongyi, and the market value reached about 10 billion. Jianxin Trust did not rush to exit, they found that although Qianfang Technology began to dabble in smart transportation very early, it also began to face the problem of enterprise transformation - an integrator who does integration business, to become a product enterprise, which is a big change.

At the beginning of 2017, Qianfang Technology, which has been making frequent moves in the capital field, cooperated with Jianxin Trust to acquire Zhejiang Uniview from Bain Capital Holdings, which is second only to Hikvision and Dahua in the field of security, and is the leader in the field of high-end security product segmentation. The following year, the two companies carried out a major asset restructuring, and Zhejiang Uniview was loaded into Qianfang Technology, and the market value soared to 30 billion yuan.

Due to the large initial investment, Jianxin Trust once accounted for more than 10% of Qianfang Technology, becoming the largest external shareholder. "From 2018 to 2019, we felt that it was almost the exit period, and it was also in order to introduce Alibaba as a strategic investor, so we sold a part of the shares to Alibaba Cloud." Chen Quan recalled. Today, Alibaba is the second largest shareholder of Qianfang Technology, and Jianxin Trust holds nearly 3% of the shares.

Chen Quan introduced that Jianxin Trust will also serve as a long-term strategic investor of Qianfang Technology in the future, because this company conforms to the 3 important investment logics of Jianxin Trust: first, the continuous investment of the industrial chain, domestic substitution, to ensure that the national key industrial chain "does not drop the chain"; second, ecological investment, to invest in the entire ecology, for example, they have invested in a game engine, but also invest in upstream and downstream toolbox enterprises, chip design enterprises, etc.; third, advanced investment, For example, they once invested in a company in Finland that makes AR lens chips, "There are 4 companies in the world that can do this, 1, 2, 4 are the United States, and we invested in Finland." ”

"Placing heavy bets, accompanying growth, and exiting benignly, this is one of our investment philosophies." Chen Quan said that Jianxin Trust has always been closely linked with this company from PE investment, to major asset restructuring and holding acquisitions, "for example, we are still planning together, is it possible to do some major strategic acquisitions and injections in the field of unmanned driving."

In 8 years, Qianfang Technology has grown from a scale of 1 billion yuan to a giant with a market value of more than 30 billion yuan, which has brought considerable returns to Jianxin Trust. "The investment principal has long been fully returned, and the goal now is how to roll the investment and achieve higher returns."

More than 100 high-net-worth customers, 800 million yuan in 1 month

Jianxin Trust: The difficulty of fundraising is a false proposition for us

This is a special PE with a banking background.

In fact, CCB Trust is a non-bank financial institution controlled by CCB. In 2008, CCB decided to enter the trust industry and was approved by the State Council, when the industry status quo was that there were only 68 trust licenses in the country, and they were no longer added, and these licenses were basically distributed in various cities. As a result, China Construction Bank began to distribute "hero posts" in the hope of acquiring a license.

In the end, the Hefei Municipal State-owned Assets Supervision and Administration Commission should come "post". In 2009, CCB increased its capital by 1.5 billion yuan and became the absolute controlling shareholder of Hefei Xingtai Trust (holding 67% of the shares). In January 2010, Jianxin Trust was officially established.

Born with the golden key, Jianxin Trust can be said to have been "premeditated" for getting involved in the private equity investment business. Chen Quan introduced that since its establishment in 2010, Jianxin Trust has been cooperating with market-oriented institutions through its own funds, with the role of LP as the mainstay. Since 2014, CCB has taken equity investment as a clear direction for the transformation of its subsidiary's business, and its subsidiary, Jianxin Trust, has been entrusted with a heavy responsibility.

Among the four major banks of "industry, agriculture, China and construction", China Construction Bank is the only one that has been approved to have a trust license, so CCB Trust has always emphasized that it is a "national team of equity investment".

Based on the resource endowment of CCB, CCB Trust has placed the breakthrough point of investment on the reform business of state-owned enterprises. "Compared with other trust companies, a big feature of ours is that we have a joint venture investment platform with central enterprises and state-owned enterprises in the construction category, extending from project-based investment to the upstream and downstream of the industrial chain." Chen Quan introduced that at that time, Guangdong Province took the lead in proposing a comprehensive reform of state-owned enterprises in the province, introducing external investors, doing a pilot reform of the incentive mechanism for employee shareholding, Jianxin Trust became the exclusive partner, and initiated the establishment of a state-owned enterprise reform fund. This fund is still dominated by CCB's own funds.

The real market-based fundraising began in 2017. In that year, Jianxin Trust initiated the establishment of the first market-oriented private equity investment fund, state-owned enterprise reform and innovation private equity investment fund No. 1, which still changed the theme of the country; in 2019, the first science and technology innovation fund of Jianxin Trust was established, taking scientific and technological innovation as one of the clear theme directions.

"Launched in April 2019, it was basically completed at the end of the month." Speaking of this science and technology innovation fund, Chen Quan is full of pride - this fund has a scale of more than 800 million yuan, 10% of which is funded by Jianxin Trust with its own funds, and the remaining 90% are all high-net-worth customers of China Construction Bank. High-net-worth individuals have strong equity investments, especially in the field of scientific and technological innovation, but most of them lack reliable investment channels. As a result, this product of CCB Trust has become an important starting point for CCB to serve high-net-worth customers. ”

The pace of investment in CCB is fast-paced. Science and Technology Innovation Fund No. 1 was established at the end of April 2019, and the basic investment was completed at the end of that year. So they launched a second science and technology innovation fund in April 2020, with a scale of nearly 900 million yuan, Chen Quan introduced, at the end of 2020, this fund will also be basically invested.

"The difficulty of fundraising is a false proposition in our eyes." Relying on the abundant high-net-worth customer resources of CCB, the fundraising path of CCB Trust has always been relatively easy. However, Chen Quan also stressed that Jianxin Trust is also expanding its diversified LP circle, and now Jianxin Trust has cooperated with guidance funds in Hubei, Jiangsu and Guangdong: "From the overall trend, the proportion of institutional investors is increasing. ”

"Truly top-notch projects need to be exchanged for resources"

Benchmarking blackstone cannot be limited to the domestic market

During the changes in the industry, the VC/PE circle is undergoing a new round of reshuffle.

The most obvious is the heading of fundraising. Since the beginning of this year, head institutions have frequently raised large amounts of funds, and in contrast, many former private equity funds have disappeared. In this regard, Chen Quan said that every spiraling industry, after the peak of the wave will slowly enter the trough, a few cycles down, China's venture capital industry is gradually returning to rationality - "Perhaps at the beginning everyone has no performance, relying on storytelling is useful, but now everyone needs to rely on the historical performance to speak." ”

The current situation of head gathering is playing out in every way. From the perspective of investment, he believes that good projects should be explored independently, but the real top projects must be obtained by top resources.

CCB Trust has also set up a fintech fund, and CCB may be the most important user and purchaser for any technology-based application in the financial field. "We are promoting a fintech company, and the main customers and application scenarios are banks. Relying on CCB, we can bring enough data and order volume to it, which is the resource. ”

Nowadays, high-quality projects in the industry must be in short supply, good projects are not worried about money, and corporate valuations have begun to polarize. "What is the core competency in the investment industry? I think it's pricing power. Whether in the primary or secondary market, the final comparison is valuation and pricing power. Chen Quan further explained that a very important part of the investment proposal is the valuation model, and the pricing depends on some objective factors, such as financial status, market conditions, etc., but there are also many subjective factors, judging whether it is linear growth, exponential growth, steady growth or downward.

Investing is not an easy task, because investors need to stand on today and look at the next three or five years. In the view of Jianxin Trust, everyone has their own evaluation system for valuation, and the key lies in the judgment of the future of the industry and enterprises, in short, "everyone is more and more making money by their own ability." ”

6 years ago, the leaders of CCB positioned the private equity business of CCB Trust to be the first place in the "banking system equity investment institution", and now, their goal has long exceeded the banking system and the entire Chinese PE circle, Chen Quan told the investment community: "As a national equity investment team, CCB Trust must play a greater role in the new pattern of double-cycle development. Therefore, we must look at the world and take the initiative to benchmark the top institutions in the world, such as Blackstone, Bain Capital, etc. That's what we're trying to do. ”