This evening, founder group, which has attracted much market attention, has restructured and welcomed the big news. Ping An issued an announcement that after the voting of the creditors' meeting held by the reorganization entity, the Beijing No. 1 Intermediate People's Court ruled that the "Draft Reorganization Plan of Peking University Founder Group Co., Ltd.", formulated on the basis of the "Reorganization Investment Agreement", was approved and came into effect in accordance with the law, and Ping An Life will actively promote the follow-up work stipulated in the "Reorganization Investment Agreement" and the draft reorganization plan with all parties.
Enterprise bailouts have also welcomed the shadow of insurance capital. According to the previously disclosed reorganization plan, Ping An Life will acquire 51.1%-70.0% of the equity of New Founder Group for a consideration of 37.05-50.75 billion yuan, that is to say, Ping An Life will become the controlling shareholder of New Founder Group and lead the reorganization.
As we all know, the restructuring of Founder Group is not an easy task. Debt is at the top, liquidity is tight, such a "big man" has now been able to break the game, why? Why does Ping An of China "face difficulties" in the midst of many capitals "retreating from difficulties"? Today we will elaborate on the logic.
The bottom of the Founder Group reorganization
The reorganization of Founder Group goes back to the end of 2019.
On December 3, 2019, Founder Group announced that the "19 Founder scp002" ultra-short financing bonds issued by it with a scale of 2 billion yuan failed to complete the redemption on time due to tight liquidity. The market is in an uproar. Subsequently, the joint rating agency downgraded the main credit rating of Founder Group from aaa to a, and the rating outlook was negative.
After that, the situation did not improve, on February 18, 2020, Founder Group announced that it had received a notice served by the Beijing No. 1 Intermediate People's Court, and bank of Beijing applied to the court to reorganize the issuer on the grounds that Founder Group had failed to pay off its debts as they fell due, and it was obvious that it did not have the ability to pay off, but had reorganization value.
Two major information points are worth paying attention to, one is the dilemma of Founder Group - it does not have the ability to pay off debts. According to the data, as of the end of September 2019, the total assets of Founder Group were 365.7 billion yuan, the liabilities were about 303 billion yuan, and the asset-liability ratio was about 83%. The debt is more than 300 billion, which is a "hot potato".
The second is the particularity of the form of treatment - it has the value of reorganization. As one of the highest-quality school-run enterprises in the past, Founder Group has no shortage of high-quality assets, including 6 listed companies including Peking University Resources, Founder Technology, China Hi-Tech, Founder Holdings, Founder Securities and Peking University Pharmaceutical. Therefore, when resolving the dilemma, the "reorganization" approach is used.
The deep meaning of reorganization is that for enterprises that have or may have bankruptcy reasons, but have the hope and value of salvation, through the coordination of the interests of all stakeholders, the legal system of compulsory equity, business, asset restructuring and debt liquidation by law to avoid bankruptcy and obtain rebirth.
The establishment of the reorganization system is to try its best to alleviate the adverse effects of bankruptcy of enterprises when possible, avoid or reduce the unemployment of employees, save the economic and social value of enterprises, protect social investment and operation, maximize the value of bankruptcy estate, and protect the rights and interests of creditors and other stakeholders. Founder Group is exactly that.
"Getting rid of difficulties and rebirth" was the expectation of the government and the market at that time. However, restructuring is not an easy task, it is reported that in the lead to the war, multiple capitals throw "olive branches" to Founder Group, and after layers of consideration and round of deletion, it is finally determined that the consortium composed of Zhuhai Huafa Group Co., Ltd., China Ping An Insurance (Group) Co., Ltd., and Shenzhen Tefa Group Co., Ltd. will be the reorganization investors of Founder Group.
"War investment, with the goal of saving debtor enterprises and restoring sustained profitability, must have strength and even more ability." This is the voice of the market. Undoubtedly, the war investment urgently needed by Founder Group must have the strength to resolve the crisis, and it must also have the ability to revitalize the value assets of Founder Group, promote it to return to the right track, and move forward more steadily. Ping An of China stands out precisely because of the above two dimensions.
Bailout enterprises, the responsibility and choice of insurance funds
Returning to the dimension of Ping An of China, why should Ping An "come forward" when the market thinks founder group is "complicated"?
Let's start with the particularity of the insurance industry. Insurance is a stabilizer of social development and a booster of economic growth. On the one hand, the "stabilizer" of the insurance company itself contributes to the high-quality progress of the social economy; on the other hand, it has the meaning of solving difficulties and relieving the real economy and consolidating the foundation of stability. "Booster", more emphasis on the use of insurance funds, through the long-term nature of insurance funds and other advantages, for the real economy to increase the source of funds, to resolve financial risks, reduce the leverage ratio of enterprises, maintain financial stability is of great significance, for the long-term sustained and healthy development of the economy to lay a solid foundation.
Serving the national economy and people's livelihood, serving the real economy, solving difficulties and bailing out enterprises, and helping the recovery and development of the national economy have always been Ping An's original intention and key layout cutting point. Ping An executives have also publicly stated on many occasions that Ping An has always insisted on serving the real economy, and through its insurance, banking, financial technology and other businesses, it has allocated more than one trillion financial resources to key areas and weak links in economic and social development. From Ping An's 2020 annual report, it can be found that as of the end of December 2020, Ping An of China has fully supported the development of the real economy, and has invested more than 5 trillion yuan in financial resources through insurance capital investment and bank credit.
From the perspective of enterprise bailout, in 2019, the state issued opinions aimed at creating a better development environment to support the reform and development of private enterprises. Among them, insurance funds are specifically mentioned. The opinions are clear that under the premise of legal compliance, asset management products and insurance funds are supported to actively participate in the bailout of private enterprises by investing in private equity funds and other means. Therefore, the bailout of enterprises is related to the national economy and people's livelihood, which is conducive to resolving the risk of non-performing assets, which is naturally one of the focuses of Ping An's responsibility.
More importantly, opportunity. As can be seen from the above, Founder Group has no shortage of high-quality assets, which is precisely a point of investment in insurance funds. In recent years, under the background of the continuation of the "asset shortage" situation and the long-term downward channel of the expected yield of fixed income, the difficulty and pressure of insurance capital allocation have gradually increased. Finding new opportunities to promote the preservation and appreciation of insurance funds as debt funds is an urgent need of insurance funds themselves.
Therefore, for example, in enterprises such as Founder Group, cash flow is extremely tight, operations are facing major difficulties, and special opportunities arise when a crisis occurs. Special opportunity investment usually appears in the form of debt assets or debt conversion (including property rights and equity), which is an investment type with downward protection advantages and outstanding value-added value, and can form a benign interaction and support with other investment sectors of insurance funds.
From this, it can be seen that based on the characteristics of cross-cycle, rich duration, high yield, and strengthened business synergy, the "asset shortage" environment provides a new choice for the allocation path of insurance funds. Ping An's bailout of Founder Group is in line with the above logic.
A sample of a "four wins" insurance bailout
In the case of Ping An of China's participation in Founder Group, it can be said that this is a typical insurance capital rescue case, and more importantly, this case, interpreted from a win-win perspective, is a "four wins" insurance capital rescue sample.
First, from the perspective of Founder Group, the difficulties of operation and the dilemma of debt peaking will be alleviated. According to the reorganization plan, the reorganization entity invested in the establishment of the new Founder Group with retained assets other than all the rights and interests of Founder Microelectronics, and sold the whole to investors. The emergence of the "White Knight" and the establishment of new entities, to a certain extent, effectively integrate industrial resources, optimize the asset structure, debt structure, corporate governance structure and personnel structure, and resolve debt risks, will prompt Founder Group to re-embark on the right track, and move forward steadily towards the goal of "enterprises with excellent asset quality, perfect corporate governance structure and sustainable profitability". Difficult enterprises get rid of difficulties, and New Founder Group "clean start", which will also consolidate the foundation for the high-quality progress of the real economy.
Second, from the perspective of founder group creditors, debt recovery is on the right track, and legitimate rights and interests are guaranteed. According to the latest restructuring information, according to the choice of the creditors of the reorganization entity for the repayment plan of the creditors, Ping An Life and Huafa Group (representing Zhuhai State-owned Assets) will transfer not less than 73% of the equity of New Founder Group in a 7:3 ratio, and no more than 27% of the equity of New Founder Group will be paid to creditors who choose to pay their debts with shares. That is to say, the reorganization plan will maximize the satisfaction of creditors' demands, creditors can obtain a certain degree of debt repayment, and share the follow-up development results of New Founder in the case of choosing part of the equity of New Founder. While recovering debt, creditors harvest a solid investment project, which is a win-win situation.
Third, from the perspective of the government and social economy, risks have been smoothly resolved, and the economy and people's livelihood have been consolidated. Founder Group is a large-scale liability enterprise, if the crisis is not properly handled, there are not many risks, on the one hand, as an enterprise, if the operation difficulties will add uncertainties to the real economy; on the other hand, Founder Group's huge debt, involving many institutions, there is a risk transmission situation; in addition, the number of employees under the Founder Group that has developed for many years is huge, and there are not many livelihood problems such as employment. As a result, the intervention of the Ping An Consortium of China has given the above problems a better opportunity to solve, and it is undoubtedly of great social value to solve the crisis, stabilize social employment and reborn some high-quality businesses.
Fourth, from the perspective of Ping An of China, under the sound investment, it can further promote its deepening layout in the fields of medical treatment, finance, science and technology. It is understood that in the new Founder Group, medical health is the core advantage of the business sector, its Peking University Medical Industry Group Co., Ltd. has a world-class medical brand, covering medical services, pharmaceutical industry and other fields, with the mission of "building a world-class hospital" as the mission of Peking University International Hospital, is also a hospital that concentrates the best medical resources of Peking University.
"Finance is the present tense of peace, and healthcare is the future tense of ping an issue." In recent years, Ping An of China has continued to promote the implementation of the medical and health ecosystem strategy, and the existing territory has covered 12 entities such as Ping An Good Doctor, Ping An Smart Medical, Ping An Medical Insurance Technology, Ping An Life and Pension Insurance. This time, participating in the restructuring of Founder Group, Ping An will obtain the most scarce and cutting-edge physical hospital resources.
This article originated from Blue Whale Finance
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