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PEdaily E-Magazine Issue No. 539 Summary

Core Content

This issue of PEdaily E-Magazine, published on June 29, 2012, provides an overview of the latest developments in China's private equity (PE) and venture capital (VC) industry, including regulatory updates, investment activities, and market trends. It serves as a comprehensive resource for industry insiders, offering timely and in-depth analysis of the market dynamics.

Main Views and Key Information

1. Regulatory Developments: New Third Board and Unlisted Public Companies

• The China Securities Regulatory Commission (CSRC) issued the Measures for the Supervision and Administration of Non-listed Public Companies (Exposure Draft) to gather public opinion.
• These measures introduce institutional innovations compared to the listed company system:
  • No financial thresholds required.
  • Shareholder numbers can exceed 200.
  • No issuance review committee or sponsorship system.
  • Simplified information disclosure.
  • Hierarchical management system.
• The aim is to serve SMEs and address their financing difficulties, as the ChiNext market has high entry barriers, limiting access for small and micro enterprises.

2. Investment Highlights

Fosun Pharma Invests RMB50M in Sinopharm Fund

• Fosun Pharma plans to invest RMB50 million in the Sinopharm Fund.
• The investment is part of a larger $125 million funding round announced in September 2011, which included government grants, low-interest loans, and tax incentives.
• The funds will be used for scaling manufacturing, R&D, and business development in China for energy storage technology.

Dionly Raises US$20M

• Dionly, a jewelry e-commerce platform, raised US$20 million on June 25, 2012.
• Kingtaifook led the investment.
• Dionly operates with a "network + stores" model and has over 160 stores nationwide.
• The funds will be used for e-commerce development.

SVG Optronics Lists on ChiNext

• SVG Optronics Co., Ltd. was listed on ChiNext on June 28, 2012.
• The company plans to issue 15.5 million shares at RMB20 per share.
• Key shareholders include SZ-VC and Jiangsu VC, who contributed RMB4M and RMB3M respectively in 2001.
• The company is a leader in optronics manufacturing, including laser imaging, holography, micro-optics, and film industry.

TRCE Lists on ChiNext

• Top Resource Conservation Engineering Co., Ltd. (TRCE) was also listed on ChiNext on June 28, 2012.
• It plans to issue 80 million shares at RMB8.18 per share, with an opening price increase of 27.75%.
• Dezhibao holds 34.30% of the company, making it the controlling shareholder.
• The company focuses on waste heat power generation through contract energy management.

CITIC Mezzanine Fund Receives RMB100M from Fangda Special Steel

• Fangda Special Steel invested RMB100 million in CITIC Mezzanine Fund on June 28, 2012.
• The fund is a limited partnership based in Shanghai, initiated by Shanghai Youde Equity Investment Center.
• The fund is expected to target no more than RMB6 billion in total.
• It offers flexible investment modes, including bond, bond-equity combination, and equity-only investments.
• Focus areas include buyout financing, corporate equity mortgaged financing, and resource/asset mortgaged financing.

Sinolink Securities Establishes Direct Investment Subsidiary

• Sinolink Securities established Sinolink Dingxing Investment Co., Ltd. with a registered capital of RMB200 million.
• The subsidiary operates in equity, industrial, and investment management.
• Additionally, Sinolink Securities injected RMB58.8 million into Sinolink Tongyong Fund Co., Ltd., raising its registered capital to RMB280 million.

3. Market Trends and Outlook

• The capital market in 2012 is described as changing rapidly, with regulation growing and competition intensifying.
• IPOs are in volatility, while exits are in difficulties.
• The high-profit era for VC/PE is coming to an end, and the industry is entering a shakeout phase.
• Real estate funds are performing better than others in the current market.
• The VC/PE sector is expected to reshape the market landscape, with investors needing to adapt to new conditions.

Conclusion

This issue highlights regulatory changes, new investment activities, and market challenges in China’s PE/VC industry. It emphasizes the importance of adapting to a changing market environment, with a focus on SMEs, innovation, and strategic investments. The industry is evolving, and insiders must remain informed and flexible to navigate the new landscape.