During the four-year existence period, the fair value of the fund once rose by 173%, but at the end of 2019, the fair value was only 0.86 times of the investment cost, which was equivalent to a loss of 14%.
Li Shan and other investors believe that in 2017, the domestic P2P industry began to explode one after another. Xijin capital did not study and judge the market and withdraw in time, and its investment still chose the P2P field, which is one of the main reasons why the fund cannot withdraw now.
A lawyer from Shanghai Yujun law firm believes that if the information is not released to investors, it is definitely not compliant. According to the lawyer, from practice, the situation of private equity fund investment to stakeholders is one of the most common chaos in recent industries, and investors can report relevant issues to the China Securities Investment Fund Association or relevant departments of the CSRC.
Maximum floating profit 173%
According to the official website, Zhong capital is a leading direct equity investment force based in China and active in domestic and foreign innovation fields. Fund brands of Xijin holding group include Xijin capital, Zhongke Xijin, Shangshi Xijin and Yintai capital.
Guo Jia, founder of Xijin capital, is also the fund manager legal person of Xijin growth phase I.
According to the information provided to investors by Xijin capital, Guo Jia graduated from the Department of international finance of Central University of Finance and economics with a bachelors degree in international finance and international accounting. With more than 20 years of excellent experience in the direct equity investment market, it manages a number of fund brands, including: ventechchina (registered in Luxembourg), zhongcapital tal (registered in China), TRANSPAC capital (registered in Hong Kong and Singapore).
On April 19, 2016, Xijin growth phase I equity investment fund was established with a fund management scale of 59.8 million yuan. At the beginning of its establishment, the fund invested 56.1288 million yuan in five asset projects: weiwangming Technology (product: Changdu), Beijing Lerong Multi-source Information Technology Co., Ltd. (which is the operation subject of the building block box of technology finance company, hereinafter referred to as Lerong multi-source or building block project), Chengdu Moyun Technology Co., Ltd. (hereinafter referred to as Moyun), Beibei Beijing Meili Power Education Consulting Co., Ltd. (hereinafter referred to as Meili power) and Beijing Liangduo Technology Co., Ltd. (hereinafter referred to as asset radar).
Among them, the fund invested 30 million yuan in Lerong multi-source investment and 20 million yuan in weiwangming technology, accounting for 89% of the total investment; 3 million yuan in Moyun, 1.95 million yuan in Meili power and 1.178 million yuan in asset radar.
According to the 2017 report of Xijin growth phase I, in 2017, the building block project was divided into two independent groups: building block puzzle group and Pinti group. The group is located in Chinas leading inclusive financial service platform (mainly including P2P related businesses). Its business mainly includes three businesses: building block box, building block era and building block small loan. Pinti group is positioned as Chinas leading provider of technology and financial solutions (mainly including financial technology related businesses), and its main businesses include four major brands, i.e. readysecond, Xuanji intelligent investment consulting, Hongdian fund and MF insurance.
In September 2017, the Group acquired 350.4 million shares of Yongjun International Holding Co., Ltd. (Stock Code: 8187, hereinafter referred to as Yongjun international) with HK $293 million, accounting for 73.00% of the issued shares of the company, equivalent to HK $0.8356 per share. After listing, it was renamed building block group.
Therefore, according to the 2017 report of the above fund, the investment target of the fund includes the building block puzzle group, Pinti group and Yongjun international.
After the split, Xijin growth phase I, through an investment of 30 million yuan in 2016 in Lerong Duoyuan, shows the shares held by the above three companies: in the annual management report at the end of 2017, it did not disclose the specific shares held by the above companies, and announced the proportion of shares held by the above building block puzzle group, Pinti group and Yongjun international 0.86% , 0.86% , 0.54% ; fund valuation as of the end of 2017 The values are 27.64 million three thousand one hundred and twenty-nine point nine Wan four hundred and thirty point seven Ten thousand.
In the concept of book value, the investment looks like making more money. By the end of 2017, the value of Xijin growth phase I equity fund increased by 41.048 million, with a multiple of 1.73 (fair value / investment cost). The building block project contributes most of the added value.
However, after the backdoor listing, the stock price of the building block group continued to be depressed, falling all the way from HK $1.55 in the initial listing period. Within four months after the listing, the stock price fell below HK $1, becoming a fairy stock. By the end of May 15, 2020, its share price had fallen to HK $0.4.
In addition to building blocks, another company, Pinti group (NASDAQ: Pt), was listed on NASDAQ on October 25, 2018. After listing, the stock price of Pinti group also fell all the way, from the opening price of $14.35 per share, to $1.23 on May 14, 2020 for more than a year.
The market value of Pinti group and building block group is also shrinking. According to the 2018 management report of Xijin growth phase I, its shares in Lerong Duoyuan, Pinti group (NASDAQ: Pt) and building block group (8187. HK) are 1489221 shares, 1489221 shares and 2076018 shares, respectively, with a fair value of about 27.3985 million yuan, 14.7764 million yuan and 1.58 million yuan.
In 2018, the fair value of the two listed companies cut back, and the value-added multiple of the overall fund fell to 1.36 times from 1.73 at the end of 2017.
According to the major shareholders shares announced by Pinti group in the US Securities and Exchange Commission, Xijin capital did not appear in the ranks of major shareholders, but VenTECH China, managed by Guo Jia, held 17617412 shares of Pinti at the end of 2018, accounting for the total share capital 6.4% u3002 Whether Xijin capitals shareholding is also counted under Yintai capital is unknown.
The people close to the building block group told reporters that it is difficult for outsiders to figure out the equity between the subsidiary of the building block group and the listed company. The founders may be the only ones who know how many shares the venture capital fund holds in the company. At the beginning, Xijin capital should invest in the shares of small companies in the start-up period. Later, after the expansion and collectivization of the company, Xijin capitals shares in the overall group may not have changed, but which company should it hold should not be announced.
Whether it is suspected of interest transmission
In addition to the building block project, the 20 million vivanming technology project invested by the fund in the initial stage also suffered a floating loss in 2019.
Han Ying, the legal person of weiwangming technology, and Guo Jia are husband and wife, investors said. In Xijin growth phase I equity investment fund contract and subsequent annual management report of the fund, the fund managers did not disclose this information.
In 2018, Guo Jia and Han Ying were involved in a dispute as husband and wife, a lawyer in charge of one of Guo Jias lawsuits told reporters.
Guo Jia is the spouse of Han Ying, the actual controller of the company, according to vivanming technology in its annual report published in 2016.
In February 2016, before Xijin growth phase I was founded and invested, a public news report rated Guo Jia and Han Ying as a perfect match of the husband and wife file of entrepreneurship + investment , and said that Guo Jias investment institution is the first investor of her husband Han Yings venture company.
The valuation of vivanming technology project has also experienced a process from substantial appreciation to floating loss. According to the annual management report of the fund, after the establishment of the fund in April 2016, the valuation of vivanming technology increased to 22.756 million yuan at the end of that year.
In February 2017, weiwangming technology project was listed in the national small and medium-sized enterprise share transfer system. At that time, Han Ying, chairman of weiwangming technology, Guo Jia, partner of Xijin capital, Wu Ge and others attended the listing ceremony.
At the end of 2017, the valuation of vivanming technology increased to two thousand seven hundred and thirty point nine Wan said that the company is preparing application submission for gem IPO and Hong Kong IPO, which is expected to be completed in 2018.
However, since 2018, the net profit of vivanming technology has plummeted, from 32.91 million in 2017 to only 230000 at the end of 2018, and it is expected to lose 29.98 million in 2019. In July 2018, it completed delisting from the new third board, but failed to achieve the expected IPO of a shares or Hong Kong shares.
Even though the net profit of weiwangming technology is only 230000 in 2018, the valuation of the equity of weiwangming technology held by Xijin growth phase I is still set at 27790000, 400000 higher than that in 2017. In 2019, Xijin growth phase I initially invested 20 million yuan in vivanming technology, leaving a fair value of 14.66 million yuan in 2019.
At the end of 2019, the Fund said that the fund manager has been actively assisting vivanming technology in seeking business transformation and docking various capital market operation opportunities. At present, we are negotiating with a Hong Kong listed company on the issue of share exchange and merger.
Questions to be solved
It is only when there are problems with the funds management performance and exit that investors raise many questions. In addition to the questions in the funds investment projects to be solved, the investors also proposed that the gold and stone financial strategy to sell the fund to them is also the related company in the building block aspect.
According to qixinbao data, Lerong Duoyuan (Beijing) Technology Co., Ltd. holds 14.8% of Jinshi caice. According to the people close to the building block group, long Jingjie, the director of Jinshi caice, was also a senior executive of the building block group, but long Jingjie resigned at the end of 2019.
According to public information, Xijin capital participated in round B financing of building block group in 2015. After the 2016 round C, the building blocks were not publicly financed, the person close to the building block group told reporters
Xijin growth phase I was set up in 2016. Is it a specially raised fund invested in building block project? The above-mentioned people close to the building block group think that it may be the B round financing announced by Xijin capital, but there was no fund at that time, but it was put in place in 2016 after the fund was raised.
How much is the loss? We still dont know. We can only learn from the 2019 annual report that the floating loss is about 14%, but it may be more than 14%, because the stocks of building blocks and titanium products were still at a relatively high position at that time. The stock price at the end of April 19 is also much lower than at the end of 2019. One investor said that he didnt communicate and explain with the investors how many positions he held and what the situation was.
Li Shan and others still have some questions: first, why does the fund invest in Guo Jias husbands project? Second, why does the fund not exit after listing? Third, what is the current position in each project?
What we dont know is that the information is not very transparent. We simply held a telephone conference with little information, so lets sign for or disagree with the extension. Li Shan said. Moreover, in the telephone conference, when investors questioned the above problems, the software background was banned.
Xijin growth phase I fund is still full of confidence in the building block project. In its annual report at the end of 2019, the Fund said that in February 15, 2020, the regulatory policy of Chinas mainland market for P2P Internet business was never clear. The block group decided to focus on the national small loan business and temporarily stop engaging in P2P business based on its small loan licences (or strategic alliances formed with local licensees). It also believes that large-scale profits and stable and rapid growth will be fully reflected in the financial aspect in 2020.
It is said that building blocks will be introduced into the Chinese group. Those close to the building blocks group said that Guo Jia led the introduction of the Chinese group to building blocks, and Guo Jia has been coordinating the cooperation between the two sides. Its purpose may be to promote business cooperation between the two sides to achieve profitability, or to achieve the withdrawal of Xijin capital as soon as possible.
For private equity funds, the fund duration is the agreement reached by all partners on the operation period of the fund. Private equity fund generally belongs to closed-end fund, which has different duration according to different investment stages, generally including investment period and exit period.
At the initial stage of Xijin Growth Fund I, the duration of the fund is also stipulated - the total duration of the fund is not more than four (3) years. The first year is the investment period of the fund, and the second year after the end of the investment period is the exit period of the project investment; after three years, if necessary, based on the interests of all investors, the investment committee may, at its own discretion, extend the period for one year without convening a general meeting of shareholders or a general meeting of investors. When the fund manager deems it necessary, the fund manager may shorten the duration of the fund.
Before the expiration of the agreed duration, if the fund is unable to realize the withdrawal of all assets, the fund can choose to postpone, which is not uncommon in the industry.
PE industry investors told reporters, there is a clear plan for project investment and exit time, and there will not be too much delay.
In this regard, the economic observer will continue to pay attention to the follow-up progress of how Xijin capital will respond to various questions from investors and when the fund will be liquidated.