Allying with Jiuding Capital, Temasek’s PE Tries A-share Exit
HDHM listed in SMEs board in June 2012 was not Temasek Holdings’s occasional A-share delisting “individual case”. Recently, in the tutoring publicity materials for IPO of Ningbo Renjian, the reporter saw Vertex China Capital Limited (Chinese name: 祥峰投资) , a solely-funded PE firm affiliated to Temasek Holdings, focusing on investing China’s growth-type enterprises.
The first A-share delisting case came to HDHM
“Besides the two cases, we also invested other projects, including some projects listed in the A-share market.” managing director and China chief investment officer of Vertex Ventures Zheng Juncong told the reporter, “We think that, A-share market is also an important (delisting) channel.”
Due to Vertex Ventures’s special capital background, Vertex Ventures’s opinion was deemed to represent the attitude of Temasek Holdings towards the China A-share market. According to the description on the official website of Vertex Ventures: Vertex Venture Holdings Ltd. (Vertex Venture Group) is a wholly-owned subsidiary of Temasek Holdings Group, engaged in investing in some emerging enterprises and excellent VC funds in Asian-Pacific and American regions. The data indicate that, its directly-controlled funds are up to 16.
Although Vertex Ventures indicated that Vertex Ventures has invested in China since the 1990s, the delisting of corporate investment project had been performed on the overseas market previously. “HDHM was the first case among our investment projects to delist via A-share market.” Zheng Juncong said. Such case shows Vertex Ventures’s capital vein and investment track in the A-share market.
According to HDHM’s disclosed data, the relationship of Temasek Holdings and Vertex Ventures is: Temasek Holdings→100% investment in Fullerton (Private) Limited→100% holding of Ellensburg Holding Pte Ltd→100% holding of Vertex Venture Holdings Ltd (that is, Vertex Ventures Holdings Ltd.)→100% holding of Vertex Asia Growth Ltd (Investment Asia Growth-type Enterprises Fund, established in 1993)→100% holding of Vertex China. Therefore, Temasek Holdings is Vertex China’s actual controller. Therefore, Vertex Ventures becomes Temasek Holdings’s “directly-controlled troop” in the A-share market.
Advance with Jiuding Capital
According to the two disclosed cases: HDHM and Renjian Pharmaceutical, Vertex Ventures’s delisting projects in the A-share market show two obvious characteristics:
The first characteristic is the same access path. According to the information disclosure, Vertex Ventures entered HDHM in October 2010, when Vertex Ventures completed its secondary investment through holding the shares transferred by HDHM’s original shareholder - BVI Milestone Co., Ltd. It is learned by the reporter that Vertex Ventures used the same way to enter Renjian Pharmaceutical, that is, completing its secondary investment through holding the shares transferred by Renjian Pharmaceutical’s original shareholder.
The second characteristic is to advance with Jiuding Capital. The reporter noticed that, in October 2010, five PE firms including Vertex Ventures and Jiuding Mars entered HDHM through the transferred shares. HDHM disclosed that, Jiuding Mars’s sole shareholder was Jiuding China, and Zhongyi ZHAO was entrusted by Jiuding China GP Limited to execute Jiuding China’s enterprise affairs, which indicated that Jiuding Mars should be a fund affiliated to Jiuding Capital. Likewise, in Renjian Pharmaceutical’s shareholder list, the reporter saw Jiuding Makemake Limited, which has been proved by Vertex Ventures that Jiuding Makemake Limited was a fund affiliated to Jiuding Capital. The data indicate that Vertex Ventures and Jiuding Capital are closely connected, and Vertex Ventures is one of Jiuding China’s LPs.
“The two cases were coincidental” Zheng Juncong said, “The two cases were our medium- and later-stage projects. The medium- and later-stage projects were Jiuding Capital’s focus of investment, so the two sides appeared in the same project.” Zheng Juncong has said before, Vertex Ventures and its invested funds were not merely competitive relation, as well as cooperative and complementary relation. The both sides can utilize resources effectively. Zheng Juncong also said, Vertex Ventures has invested more preliminary projects. Since 2009, Vertex Ventures has invested nearly 20 enterprises in China, with the gross investment of more than 150 million US dollars. In these projects, Vertex Ventures mainly invested through capital increase and share expansion. “For example, not long ago, we announced the A-round investment in a China Business Progress Management (BPM) software provider ActionSoft, which used the mode of capital increase and share expansion.”
As Vertex Ventures’s first investment in the A-share market, HDHM richly rewarded Vertex Ventures. According to HDHM’s disclosed data, Vertex Ventures’s buying price per share was nearly 2.25 yuan. Calculated by HDHM’s yesterday's closing price, its investment profit was 211% or so.