Gree Equity Competition: 13.2 Billion Money-grabbing Game

 Gree Equity Competition: 13.2 Billion Money-grabbing Game

The equity transfer of Gree Electric Appliances (000651.SZ) with a transaction value of more than 40 billion yuan has entered the most critical stage. The intentional transferee will eventually have only two top PE, Gaolu Capital and Magnolia Capital.

Transfer price, 44.17 yuan per share. The closing price of Gree Electric Appliances on September 6 is 58.87 yuan. It earns 13.2 billion yuan.

Grab money and make 13.2 billion yuan if you buy it.

In mid-August, Gree Group announced that it would collect and transfer 900 million shares of Gree Electric Appliances to give up its position as a major shareholder. Transfer price, 44.17 yuan per share. The closing price of Gree Electric Appliances on September 6 is 58.87 yuan. It earns 13.2 billion yuan.

At the beginning, there were 25 intentional investors, including Houpu Investment, Baidu Netnews in Beijing, Temasek Holdings of Windsor Capital in Shenzhen - Temasek Investment Consulting (Shanghai) Co., Ltd. and Gaolu Capital. In the end, all corporate entities were excluded and only two partnerships were included. First, good character, second, Zhuhai Mingjun Investment Partnership.

Fang Fenglei, the former founder of Zhongjin Corporation and chairman of Gaohua Securities Company, is the core figure of Houpu Capital behind Gewu Hood. Fang Fenglei has participated in many top projects in Chinas capital market, including the acquisition of Hong Kong Telecom and PCCW by China Telecom; the reorganization and listing of China Mobile, China Telecom, China Unicom, PetroChina, Sinopec, China Ocean Oil, Baosteel and other enterprises, once known as the most influential person in Chinas capital market.

In 2008, Fang Fengleis Houpu Fund completed its initial collection and raised $2.5 billion. Investors include Temasek, Goldman Sachs and Shell Retirement Fund.

Zhuhai Mingjun Investment Partnership is backed by Zhang Lei of Gaolu Capital. Zhang Lei graduated from Yale University and was the chief representative of the New York Stock Exchange in China. After founding Gaolu Capital, it invested in many phenomenal enterprises such as Tencent, Jingdong and so on.

According to media reports, Gaolu Capital currently manages more than $50 billion in total assets. In September 2018, a $10.6 billion PE fund was raised to reposition Chinese assets.

Netease finds that the source of funds behind Zhuhai Mingjuns investment partnership is extremely complex, penetrating upwards, and the investors appear the figure of He Xianjian of Mei Group. In addition to the funds of He Xiangjian, behind Zhuhai Mingjun Investment Partnership, there is the figure of Gree Electrical Appliance Distributor.

In response to this, people close to Gaos response to the media, Tiancheng Phase II Fund in the early days of its establishment, and investors (LP) signed agreements, there are agreements, if investors in the future will have a conflict of interest or adverse impact on an investment project, Gao can exclude the investor (LP) to participate in the investment project.

Record race

Both intent transferees have paid Gree Group a performance bond of 6.3 billion yuan.

Netease financial query found that Gewu Hood completed the registration of fund products, and as of September 8, 2019, Zhuhai Mingjun and its LP Shenzhen Gao Hanying Investment Consulting Center (Limited Partnership) (hereinafter referred to as Gao Hanying) showed that they had not filed in the China Securities Investment Fund Association.

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Fund filing is actually the recognition of the compliance of fund products by the fund industry association. Before the filing is completed, the fund industry association requires the fund not to be able to invest and operate. A private equity fund manager called NetEase Finance.

According to Article 15 of Contract Guidelines for Private Equity Funds No. 1 (Guidelines for the Content and Format of Contract-type Private Equity Funds), private equity funds shall perform the fund filing formalities to the China Fund Industry Association in accordance with the provisions. The fund contract shall stipulate that the private equity fund shall not be invested until the China Fund Industry Association has completed the filing.

Once Zhuhai Mingjun is identified as the final transferee, the 6.3 billion contracting bonds will automatically be converted into performance bonds, which is also part of the transaction. According to the regulation of the fund association, if Mingjuns behavior of paying the contracting deposit is deemed to have violated the regulation to invest in operation, then the 6.3 billion yuan will face the risk of non-return. Lawyer Wei Qiang, partner of Yingheng Law Firm, expressed his views on Netease Finance and Economics.

In addition to participating in the public solicitation before the completion of the fund filing, according to the document requirements in the public solicitation announcement, Zhuhai Mingjun should have made a number of important commitments including the authenticity and compliance of the information provided in the documents submitted to Gree Group.

The private product of the last public face-beating fund association was the Shanghai Baptist Xin Fund, which raised up to 5.2 billion yuan and invested in overseas sports merger and acquisition project MPS, and suffered almost total military collapse. The fund has not been filed in the Fund Association for more than two years since its establishment, and has become a recent private fund. Jin Zhongs most famous case is that he only drives without buying tickets. However, its executive partner, Everbright SecuritiesEverbright Immersion Investment Management Co., Ltd. is currently only listed as an abnormal institution by the fund industry association in terms of honesty and credit information.

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However, the huge overseas investment losses of Shanghai Baptist Xin Fund have fallen into a state of multi-party responsibility-shifting. In the case of Zhuhai Mingjuns incomplete filing, if the 6.3 billion performance bond is at risk due to compliance problems, can investors recover losses? Who will take responsibility?

Gaolu, Houpu or all have started to raise funds.

The amount of this public collection is about 40 billion RMB. Therefore, both Gaolu and Houpu have to raise funds and accept new LP to pay for the transfer of Gree Electric Equity. Although no new LP information was available from both sides, a general manager of private equity fund in Shanghai said: High-collar capital and Houpu capital have been raising funds simultaneously, and the process of finding LP is almost the same for both sides.

The fund set up before 2015 is the default stock part, which need not be filed. Private equity funds set up after 2015 need to be filed before they can carry out fund-raising and other related work. So if the operation involves external fund-raising, or eventually through equity, more than 10 LPs are found, then the probability is over. It became a fund-raising act.

Private-equity funds require a high timeliness for foreign investment, and it takes a long time to record their products, which often leads to the failure of the funds to invest abroad in a timely manner. In order to balance the relationship between compliance and efficiency, in practice, the fund industry association has adopted a more realistic interpretation of investment operation. That is, before the completion of the private fund product filing, the act of reaching an investment agreement is sometimes acquiesced, but the red line is that the fund can not actually pay the investment. The general manager of the private equity fund expressed his views on NetEase Finance and Economics.

Author: Zhang Yong, a Shanghai intern in Netease Finance and Economics

Outside Netease | Producer: Yao Changsheng Qi Dongliang

Source: Off-line Editor of Netease: Yang Bin_NF4368