Chinas version of Blackstone is lack of non-performing assets and the industrial restructuring is faltering

category:Finance
 Chinas version of Blackstone is lack of non-performing assets and the industrial restructuring is faltering


Reporters learned from many sides that oak capital and Blackstone Group allocated more than 100 industrial restructuring talents in the field of non-performing asset disposal, because they had also taken a detour. In the beginning, the reason why they bought the non-performing assets in a large scale was also based on the consideration of low purchase and high sale and easy profit. However, with the rapid change of economic cycle and industry development trend, a large number of non-performing assets can not be sold at a high price, but the quality of assets is getting worse and worse. Therefore, the senior management of these investment institutions decided that rather than rotten them in their hands, they should set up their own industrial restructuring team to help them come back from the dead.

As a result, there are a large number of all in one investment institutions in the whole industrial chain, such as acquisition, disposal, asset activation, industrial restructuring, asset sale (or re operation and listing) of non-performing assets in the European and American capital markets, among which oak capital and Blackstone Group are the leaders.

However, it seems that the conditions for domestic NPAs disposal institutions to become the next oak capital or Blackstone Group are not mature.

A number of people from non-performing asset disposal institutions told reporters that the biggest bottleneck for domestic non-performing asset disposal institutions not to extend to industrial restructuring business at present is mainly three points: first, the introduction cost of professional talents in industrial restructuring is quite expensive, and most non-performing asset disposal institutions are unable to bear the cost; second, the technological R & D and product innovation ability of most domestic enterprises in difficulty It is relatively weak. Unlike many bankrupt enterprises in Europe and America, it has strong technology R & D capability, but the market expansion effect is not good and they are in debt predicament, so it has a very strong operation space for technology merger and absorption. Thirdly, there are too many minefields such as hidden debt in domestic enterprises in distress, so NPA disposal agencies have to spend a lot of energy and time on mine clearing, not at all Spare no effort to carry out industrial restructuring.

Therefore, the introduction of external industrial investors to carry out asset restructuring of distressed enterprises is becoming an important way for many domestic non-performing asset disposal agencies to extend their business scope to industrial restructuring.

Before that, most of the creditors of Huishan dairy industry voted no at the voting meeting of the assets reorganization plan, one of the important reasons is that they hope to introduce external industrial investors, realize a greater activation and appreciation of assets through professional industry reorganization and asset integration, so as to minimize the loss of credit bad debts. Now, with Yili industry invited to participate in the assets reorganization bidding of Huishan dairy, many bank creditors have become more active in supporting the new assets reorganization plan.

However, to introduce external industrial investors, NPAs and related creditors may have to pay a considerable price. Take Huishan dairy as an example. By the middle of January 2019, Huishan dairy had confirmed the debt amount (i.e. Huishan dairys debt amount) of RMB 24.218 billion, with the corresponding enterprise valuation of RMB 14.927 billion. If calculated by 70% debt reduction range, if Yilis bid is successful, it will mean that it will bear the debt of RMB 7.265 billion, plus the investment of RMB 1.5 billion, i.e. Yili needs to invest RMB 8.765 billion in exchange for Huishans debt 67% equity of the new dairy company (corresponding to the valuation of RMB 10 billion).

However, it is still unknown whether Huishan dairys various creditors agree to reduce about 70% of their claims to introduce external industry investors. It can only be determined by the second round of voting. A person familiar with Huishan dairys asset restructuring process told reporters. In his opinion, compared with the extent of debt reduction, many creditors should look far away - if Yili industrys intervention can restore Huishan dairys hematopoiesis capacity and its performance continues to improve, and even has the opportunity to re list, its asset appreciation may exceed their original capital repayment expectations.

Reporters have learned from many sides that, in the process of non-performing asset disposal and revitalization, whether to introduce external industry investors and agree to substantially reduce debt or give priority to specific asset disposal right of repayment is becoming a new focus for creditors, non-performing asset disposal institutions and relevant stakeholders to fight secretly.

In most cases, the biggest operational difficulty of introducing external industrial investors is not necessarily that all kinds of creditors have different opinions, but that local government departments are worried that local enterprise assets, technology and production capacity may be transferred as a result, affecting local employment and economic development, resulting in relevant operations often abandoned halfway. A person in charge of the non-performing asset disposal agency, which has participated in negotiations for the introduction of industrial investors for many times, told reporters. Especially when the external industry investors want to get the most priority right to be paid for the disposal of the assets of enterprises in distress, some local governments are often quite alert - worried that this will lead to the loss of the interests of local banks and creditors of small and medium-sized enterprises, as well as the failure of the external industry investors to sit and wait for the rescue of enterprises in distress, and then turn away the most valuable assets and technologies of enterprises.

In his opinion, how to persuade local governments to rest assured and boldly introduce industrial investors to save enterprises will be a profound knowledge - sometimes industrial investors need to give a commitment, that is, not only not to transfer technology and production capacity, not to reduce the burden of layoffs, but to put out their own best technology and production lines, to help enterprises in trouble get rid of business difficulties and debt pressure as soon as possible.

This is also a dilemma of industrial restructuring with Chinese characteristics. According to the head of the NPL disposal agency. Because there are too many interest disputes and local economic development considerations involved in the introduction of negotiations by the entire external industrial investors, unlike the European and American non-performing asset disposal agencies that carry out industrial restructuring in full accordance with the degree of marketization, and even require the local government to give corresponding financial or policy support for the reason of not laying off workers.

Source: responsible editor of 21st century economic report: Yang qian_nf4425