With the gradual large-scale development of semiconductor listed companies in the A-share market, the domestic semiconductor industry is undergoing a transformation from the pursuit of high-speed growth to the pursuit of high-quality development of quality. In this context, both the semiconductor industry and the investment field have entered a period of adjustment. Semiconductor listed companies are going to be LPs (limited partners), and they are enthusiastic about participating in industrial investment funds.
Since 2022, semiconductor investment has entered a cold winter, and very profound changes have taken place from fundraising, investment to exit. From the perspective of overall equity investment, the fundraising market has fallen sharply. According to the data of China Venture Research Institute, 2,393 new funds will be established in the first half of 2024, a year-on-year decrease of 39% and a month-on-month decrease of 45%; The scale of fundraising was US$219.5 billion, down 38% year-on-year and 15% quarter-on-quarter, making it increasingly difficult to raise funds. At the same time, the capital structure is undergoing great changes, with less and less market-oriented funds, and an increasing proportion of government funds and state-owned funds.
Taking the Science and Technology Innovation Board as an example, public data shows that as of June 30, 2024, there have been 573 companies on the Science and Technology Innovation Board, with a cumulative amount of more than 910 billion yuan, accounting for 41.7% of the total 2,185 billion yuan raised by all A-shares in the same period, ranking first among all sectors. Among them, since the opening of the Science and Technology Innovation Board, half of the top 10 companies raised funds in IPOs in various A-share sectors, SMIC, BeiGene-U, Huahong, Innosyn-U, United Imaging Medical, Haiguang Information, China General Number, JinkoSolar, Jinghe Integration, and Hehui Optoelectronics-U, half of them are from the semiconductor field, which shows the "gold absorption" ability of semiconductor companies. And most of these funds have been kept in banks for a long time.
As a capital pool with specific industries as the investment object, industrial investment funds can promote industrial upgrading, technological innovation and market expansion, and have gradually become a popular investment tool for listed companies and leading enterprises in the industrial chain in recent years. In recent years, Xiaomi, Huawei and other head terminal manufacturers have achieved good results in setting up industrial investment funds, and with the increasingly mature operation mode of mainland industrial investment funds, a number of leading listed companies have successfully participated in the establishment, so that other companies have a reference sample, especially with the domestic intention to promote the integration of semiconductor mergers and acquisitions this year, semiconductor listed companies with a large number of "surplus grain" in their hands began to intensively do LP.
On July 26, Empyrean announced its participation in the establishment of two industrial funds, of which Shaoxing Jiutian Shengshi Venture Capital Fund has a scale of 500 million yuan and Huada Jiutian subscribes 100 million yuan, and the investment direction is mainly focused on the EDA field; Anhui High-tech Oriza Puhua private equity investment fund has a scale of 2.5 billion yuan, and Huada Jiutian also subscribed 100 million yuan, focusing on investing in semiconductors and intelligent manufacturing. Empyrean said that the company and professional investment institutions jointly set up an industrial fund, which will help select and support excellent EDA point tool enterprises, help to quickly lay out EDA-related targets, create a full-process EDA tool system, and further enhance the competitiveness of enterprises, which is in line with the company's development strategy.
On July 25, Kangxi Communication cooperated with Jinding Capital to set up Zhiheng Fund, which mainly invests in excellent chip companies with good development prospects in the fields of communications, automobiles, AI, etc., and can form good synergies with the company's main business. As a limited partner, Kangxi Communications subscribed and contributed capital with its own funds.
On July 17, GigaDevice announced that it plans to jointly invest 27 million yuan with Qingyun Zhiling, Qingyun Zhifan and Qingyun Zhikuo to set up a holding subsidiary, Beijing Qingyun Technology, of which GigaDevice invested 21 million yuan, accounting for 77.78% of the shares, aiming to incubate innovative businesses such as customized storage solutions, promote the company to actively explore new technologies, new businesses, new markets and new products including customized storage solutions, and promote the long-term growth of the company's business.
Earlier, on May 30, Hefei Industrial Investment Group jointly established the Stony Brook GigaDevice Innovation Fund, focusing on the supporting technology of storage and computing power required by artificial intelligence, continuing to focus on the core areas of the semiconductor industry chain such as equipment, materials, and components required for advanced manufacturing processes and advanced packaging, and focusing on finding and investing in enterprises with core technologies and market potential; At the same time, we will closely focus on the two major future growth areas of new energy vehicles and general artificial intelligence, and look for more potential investment projects.
In the first half of this year, Chongqing Liangshan Investment Group and SMIC Wafer Equity Investment established the Sino-Singapore Semiconductor Industry Fund, with a scale of 1.001 billion yuan and an initial scale of 601 million yuan, the fund mainly focuses on the upstream and downstream of the packaging industry chain investment, focusing on the investment in the packaging industry chain, focusing on investing in advanced packaging and testing related projects such as Singapore and Malaysia, introducing domestic industrial landing, and has reserved projects to be landed in Singapore PYXIS, Imsipie and Denselight.
On January 15, Tongfu Microelectronics cooperated with Huahong Investment to set up the first phase of Huahong Hongxin Fund, and planned to set up the second phase of the fund, with a scale of 10-1.2 billion yuan, focusing on investment opportunities in the upstream and downstream enterprises of the semiconductor industry chain, which is conducive to the company to further strengthen the cooperation and collaboration with the upstream and downstream of Huahong and other industrial chains with the help of the fund platform, which is conducive to the forward-looking layout of the company's future development direction such as advanced packaging, expanding the company's upstream and downstream resources, and enhancing the company's comprehensive competitiveness.
Zhang Yu (pseudonym) revealed to Jiwei.com that listed companies on the Science and Technology Innovation Board have accumulated a large amount of cash on their books after the over-raising stage, but these funds are often only used to supplement liquidity and fail to give full play to their effectiveness. Investors expect these companies to expand and grow their capabilities through increased R&D investment or mergers and acquisitions.
At the same time, Zhang Yu pointed out that investment institutions (GPs) will change their strategies in the coming period, no longer focusing on small investments, but tend to cooperate with listed companies to jointly make large-scale investments to achieve more effective use of capital and coordinated development of industries.
"Driven by the common goal of promoting mergers and acquisitions between the two parties, it can be seen that in recent times, semiconductor listed companies have participated in funds as LPs, while GPs have acted as external due diligence teams of listed companies, providing more and more cases of capital leverage and auxiliary collaborative services." He pointed out that "these listed semiconductor companies have a large amount of cash, which can be used as external capital leverage through investment funds, such as 50 million, to cooperate with banks to carry out professional mergers and acquisitions." Most of the funds they participate in are designed to serve the needs of listed companies, especially those companies that have a lot of cash but lack a professional investment team. ”
This trend not only reflects the positive expectations of listed companies for the future development of the semiconductor industry, but also reflects the urgent need of the capital market for the deep integration of the semiconductor industry chain. By participating in industrial investment funds, listed companies can make more effective use of capital power, promote technological innovation and industrial upgrading, and at the same time bring new growth points and investment returns to themselves, so as to achieve win-win development of the company and the entire industrial chain.
Another industry insider also pointed out that at present, the industrial M&A funds established by semiconductor listed companies are mostly related to the company's own industry or upstream and downstream industrial chains. Upstream and downstream enterprises in the industry participate in the joint establishment of M&A funds, on the one hand, to seek capital appreciation and obtain satisfactory investment returns; On the other hand, it is to explore opportunities for the upstream and downstream layout of the industrial chain, strengthen industrial synergies, and strengthen communication and cooperation between partners.
This is a win-win cooperation method, semiconductor listed companies can increase revenue, expand and integrate their own industries, enhance their own strength, GP can also get more funds, enhance their own popularity, with the increase of this cooperation model, the private market itself can also get more incremental funds, to achieve the development of the industry.
It should be emphasized that with the gradual increase in the importance of industrial funds in the private equity industry, the goals of synergistic integration of the upstream and downstream of the industrial chain of listed companies, business transformation and structural upgrading have been achieved, and the liquidity of capital has also been enhanced, providing more opportunities for small and medium-sized enterprises to be acquired and acquired. However, it should also be noted that, compared with general private equity funds, the industrial M&A funds in which listed companies participate also show their particularity in terms of structure, decision-making, exit and other goals and demands. The establishment and operation of the fund involves complex issues in many fields such as law, compliance, business, finance, etc., which need to be properly handled and resolved by the listed company and its partners, so as to achieve mutual benefit and complementarity.
How to prevent risks is a topic that all parties in industrial investment funds still need to explore and think about.