This article is from WeChat official account:Touzhong.com (ID: China-Venture) span> , author: Tao Huidong, from the title figure: vision China
On the evening of February 22, 2021, the restricted shares of Stone Technology were just lifted, and more than a dozen shareholders, including directors, supervisors, and venture capital funds, announced plans to reduce their holdings, and the total number of shares to be reduced was listed. 11.1% of the company’s total share capital. Stone Technology’s lifting of the ban accounted for 42.87% of the company’s total share capital. According to the latest stock price, the market value of the lifted ban is as high as 27.6 billion yuan.
Stone Technology is the third largest stock in A-shares. It is known as the “crazy stone” and has allowed investors such as Gao Rong, Qiming, and Shunwei to get rich returns. Perhaps because of fear of Tianli’s lifting of the ban, Stone Technology’s share price plummeted 12.97% on February 22.
In fact, it is not just the Rock Technology company that has reduced its holdings. Just after the Spring Festival of the Year of the Ox, the big A-shares continued the “bull and bear” shock market. In the midst of the hustle and bustle, VC/PE are continuing the pace of quietly cashing out.
After the resumption of work on February 18, 2021, in just two days, there have been more than ten pre-disclosure announcements on the reduction of A-share holdings, and the planned reduction of holdings amounts to more than 4 billion yuan. In the last week before the Spring Festival, 21 listed companies announced a total of 53 venture capital fund shareholder reductions, involving 23 VC/PE institutions and 28 funds, with a total exit amount of more than 5 billion yuan.
In 6 years, 1.5 times, the VC that invested in BGI’s genes finally got rid of it
Before and after the Spring Festival, Gaolin Capital, which invested in BGI Gene, was one of the VC/PE with the largest exit. On February 3 alone, Gaolin Capital reduced its holdings of more than 5 million shares of Huada Genes, with a cash amount of more than 700 million yuan. Subsequently, on February 10, Gaolin Capital announced a new round of shareholding reduction plan, the amount of cash is expected to reach 300 million yuan.
Goolin Capital was the largest external investor before the listing of Huada Gene. After the listing of Huada Gene, the two main entities of Gaolin Capital, Shenzhen and Yugaolin Equity Investment Partnership(Limited Partnership) (hereinafter referred to as Heyu Gaolin) and Shanghai GaoLin Tongchuang Equity Investment Partnership (Limited Partnership) (hereinafter referred to as Gaolin Tongchuang) holds a total of more than 38 million shares of BGI, accounting for 9.6% of BGI’s total share capital, second only to “BGI It is the fourth largest shareholder of the three shareholders.
Golin Capital entered BGI in 2015, when BGI Medical, one of the predecessors of BGI, conducted a round of pre-IPO financing. The financing before the listing of Huada Gene attracted more than 40 VC/PE participation, almost half of China’s top venture capital. Gaolin Capital has invested a total of 2 billion yuan in the form of capital increase + transfer of old stocks. It is the investment institution that has placed the heaviest bet on BGI.
BGI Gene is known as the “Tencent of the gene world” and “Shenzhen’s business card”, but after it went public in 2017, it was once one of the most controversial companies on the A-share market. There has also been a downturn in stock prices. In mid-2018, on the first anniversary of BGI’s listing, the ban on restricted stocks was lifted, and the stock price once fell to more than 40 yuan, breaking the investment cost line of many VC/PE before listing.
According to the calculation of “New Fortune”, the share prices of the two main entities of Gaolin Capital are not the same. The investment cost of Heyu Gaolin is about 56 yuan per share, and the investment cost of Gaolin Tongchuang is about 37 yuan per share. .
It wasn’t until the outbreak of the new crown epidemic in 2020 that BGI’s stock price got rid of its malaise and climbed to more than 100 yuan, and Gaolin Capital was finally able to hold on to it, waiting for a good opportunity to exit.
Golin Capital’s shareholding reduction record
Since April 2020, Gaolin Capital has cashed out more than 2 billion yuan. After the reduction, Gaolin Capital still holds more than 21.49 million shares of Huada Gene, and its current market value exceeds 3 billion yuan. According to the above investment cost of Gaolin Capital, its book return multiple is about 1.5 times, and the DPI has been 1 in the sixth year of investment.
Under the catalysis of the epidemic, BGI has exploded with amazing business growth. BGIEarlier announcements of the performance report showed that operating income in 2020 is expected to be approximately 8.2 billion to 8.6 billion yuan, a year-on-year increase of 192% to 207%; net profit attributable to the parent is about 2 billion to 2.3 billion yuan, a year-on-year increase of 623.77% to 732.34%.
The current market value of BGI is more than 60 billion yuan, and its value is still a controversial topic in the investment circle. Earlier, an investor of BGI Gene said to Investment China.com that BGI is the only gene giant with a market value of hundreds of billions in China. But for VC/PE, the current returns are acceptable.
Because the other VC/PE shares that have invested in BGI have not reached 5%, the reduction of holdings is not announced, and the specific situation of the reduction is not known. However, according to China Investment Corporation’s understanding, many institutions have chosen to exit like Gaolin Capital in this period when market conditions are not bad.
Three squirrels with a return of 300 times, IDG and today’s capital reduction cannot stop
Before and after the Spring Festival, another large-scale VC that reduced its holdings was IDG, the shareholder of Three Squirrels, a snack star company. According to the announcement of the three squirrels before the Spring Festival, IDG intends to reduce its holdings of 6% of the shares of the three squirrels within six months, which is more than 1 billion yuan based on the current share price.
Three squirrels completed multiple rounds of financing before listing, and IDG and Today Capital are the main investors. In July 2019, the three squirrels completed the listing, and the first shareholder lifted the ban in July 2020. The two major investors, IDG and Capital Today, immediately started a full-speed reduction model. IDG has cashed out about 1 billion yuan before, and today’s capital has cashed out about 500 million yuan.
The reduction of holdings by 2020+2021 can reach trillions
For most VC/PE, 2020 is undoubtedly an exit year, and many institutions have achieved the best exit performance in history.
According to data from CICC, the total scale of A-share reduction in 2020 will exceed 600 billion yuan, a record high. According to the data of Industrial Securities, as the IPO scale rose from 137.8 billion yuan in 2018 to 417.7 billion yuan in 2020, the lifting of the ban on A shares and the net reduction in holdings also increased from 2.8 trillion yuan and 77.3 billion yuan in 2018. Yuan rose to 4 trillion yuan, 544.8 billion yuan in 2020.
And just like the wave of holdings reduction during the Spring Festival, 2021 will be a good year for VC/PE. CICC expects to reduce its holdings in 2021 up to 500 billion yuan. Industrial Securities estimates that the total scale of lifting of the ban in 2021 will be about 4.6 trillion yuan, of which about 14% will be reduced, which is 643.7 billion yuan, which is even better than 2020.
The secondary market has always been sensitive to reductions. However, Industrial Securities believes that although the demand for funds may increase, the supply of A-share funds is also increasing at the same time. Global interest rates are falling, and the value of equity allocation is prominent. Residents, institutions, and foreign capital have formed three living waters, and the supply and demand of stocks are in a healthy balance. It will greatly help A shares out of the long bull, and the equity era need not be overly pessimistic.
Some investors also stated to Touzhong.com that in the era of registration system, for VC/PE, lifting the ban or reducing holdings may be too extensive, which may have a relatively large impact on earnings. Time also needs to pay more attention to timing.
This article is from WeChat official account:Touzhong.com (ID: China-Venture) span> , author: Taohui Dong