Who gets the 25% stake? CITIC fund size and performance double pressure, two shareholders to liquidate

Spark Global Limited reports:

The second largest shareholder of CITIC Construction Investment Fund, Aerospace Finance, plans to transfer its 25% equity holding with 183 million yuan, which is the second time that shareholders of CITIC Construction Investment Fund have withdrawn this year

Spark Global Limited reports:
Qi Wenjian, a researcher at Investment Times

After Jiangsu Guangchuan Broadcast and Media Co., Ltd. (hereinafter referred to as Jiangsu Guangchuan) closed its position and reduced its 20% equity stake in CITIC Jiantou Fund Management Co., Ltd. (hereinafter referred to as CITIC Jiantou Fund), the latter’s equity stake may change again.

A few days ago, the website of the Beijing Equity Exchange showed that the second largest shareholder of CITIC Construction Investment Fund, Aerospace Science and Technology Finance Co., Ltd. (hereinafter referred to as Aerospace Finance), plans to transfer its 25% equity holding with 183 million yuan. If the transfer is successful, Aerospace Finance will completely withdraw from CITIC Construction Investment Fund.

As of the end of the first quarter of this year, CITIC Construction Investment had 27.899 billion yuan under management, including 16.047 billion yuan in non-money funds, according to Wind data. In 2020, the company achieved operating revenue of 300 million yuan and net profit of 47.5275 million yuan, a 25.86 percent year-on-year increase in operating revenue and an 8.6 percent decline in net profit.

Investment Times sent a letter of communication to CITIC to discuss the transfer of shares and the size of management, but had not received a response as of press time.

The second largest shareholder to liquidate holdings

Nearly three months later, a listing information in Beijing Equity Exchange pushed CITIC Construction Investment Fund to the “spotlight” again.

According to the official website of the Beijing Equity Exchange, Aerospace Finance will sell its 25% stake in CITIC Construction Investment Fund with a reserve price of 183 million yuan. The information disclosure deadline is June 29 and July 26. The payment will be made in a lump sum.

It is reported that Aerospace Finance is the second largest shareholder of CITIC Construction Investment Fund, and the largest shareholder — CITIC Construction Investment Fund (601066.SH) holds 75% of the equity of CITIC Construction Investment Fund.

“Investment Times” researchers noted that the current CITIC Construction Investment Fund equity transfer is still in the information disclosure period, the final transferee is not known. According to the rules of the transaction, the largest shareholder CITIC Jiantou Securities has the right of first refusal. Upon the expiration of the listing, if only one original shareholder who has not given up the preemptive right is the intended transferee, the project will be concluded by means of agreement transfer.

This means that if CITIC Jiantou Securities exercises the pre-emption right to acquire the 25% stake held by Aerospace Finance, CITIC Jiantou Fund will become a wholly-owned subsidiary of CITIC Jiantou Securities.

In fact, this is the CITIC fund to build the second equity changes within the year. China Securities Regulatory Commission (CSRC) approved Jiangsu Guangchuan to transfer its 20 percent stake in CITIC Construction Investment Fund to the company, according to a statement issued by CITIC Construction Investment Securities on April 6. After the equity transfer, CITIC Jiantou Securities increased its stake in CITIC Jiantou Fund from 55% to 75%, while Jiangsu Guangchuan completely withdrew from CITIC Jiantou Fund.

In addition, CITIC Construction Investment Fund executives change also attracted considerable attention. Since last year, CITIC Construction Investment Fund senior management changes involving deputy general manager, general manager, chairman. For example, on June 11, Fang Juncai took over as deputy general manager of the company, having previously served as general manager of the Beijing branch and retail business department of Wells Fargo Fund.

In February, Jiang Yueqin, the former chairman and legal representative of CITIC Construction & Investment Fund, resigned due to work arrangements. Newly appointed Huang Ling as the chairman and legal representative. From the perspective of work experience, Huang Ling has the experience of serving as a major shareholder.

According to public information, Huang Ling used to be a senior analyst at China AMC Securities Research and Development Department, director and head of administration of the bond underwriting department of CITIC Construction & Investment Securities, and is now a member of the executive committee, director of the institutional committee and co-director of the investment banking committee of CITIC Construction & Investment Securities. Thus it can be seen that the senior management change or from the major shareholder CITIC Construction Investment Securities arrangement.

“Investment Times” researchers observed that the chairman of CITIC Construction Investment Fund and major shareholders have innumerable links, the general manager is no exception. In June last year, Jin Qiang became the new general manager of CITIC Construction Investment Fund Co. He served as the general manager of the former Shenyang branch of CITIC Jiantou Securities and a number of business offices in Beijing.

In fact, Yuan Ye, Zhang Jie and Qiu Liqiang, the former three general managers of CITIC Construction Investment Fund, all have different working experience in CITIC Construction Investment Securities.

Aerospace Finance listed to transfer CITIC Construction Investment Fund equity

Source: website of Beijing Equity Exchange

Size and performance are under pressure

Behind the initiation of retreat of Aerospace Finance, CITIC Construction Investment Fund management scale and performance are facing double pressure.

CITIC Construction Investment Fund was established in September 2013, and it has been nearly 8 years. As of the end of the first quarter of this year, the company managed only 27.899 billion yuan, ranking 86 among 144 fund companies.

From the perspective of newly established funds, since this year, CITIC Construction Investment Fund has successively established four funds (i.e., CITIC Construction Investment Group One-year Fixed Bonds, CITIC Construction Investment Group Quantitative and Aprising A/C, CITIC Construction Investment Group One-year Fixed Bonds, CITIC Construction Investment Group 3-5 years Policy Financial Bond A/ Cfunds (combined calculation of various shares).

Thanks to 2020 A share market structural opportunities, some fund companies make money highlights. However, there are also a few fund companies net profit bucking the trend of decline, CITIC Construction Investment Fund is one of them.

According to the 2020 annual report of CITIC Jiantou Securities, CITIC Jiantou Fund will achieve operating income of 300 million yuan in 2020, up 25.86% year on year, and net profit of 47.527,500 yuan, down 8.6% year on year.

According to statistics, from 2013 to 2019, the company’s operating income was 2.917,200 million yuan, 13.5199 million yuan, 100 million yuan, 3.291 billion yuan, 319 million yuan, 193 million yuan, 238 million yuan, respectively. The net profits were -11.0981 million yuan, -22.5382 million yuan, 20.9886 million yuan, 109 million yuan, 89.438 million yuan, 25.8836 million yuan and 51.99971 million yuan respectively.

It is obvious that the operating income and net profit of CITIC Construction Investment Fund fluctuated frequently since its establishment. After reaching a brief peak in 2016, the two values subsequently showed a precipitous decline.

“Investment Times” researchers noted that CITIC Construction Investment Fund in 2020 management fees increased substantially. According to Wind data, the company’s administrative expenses in 2020 were 105 million yuan, an increase of 46.399m yuan, or 79.77%, compared with 58,168,700 yuan in the same period in 2019.

Customer maintenance costs, sales and service costs and custody costs increased, which also had an impact on the net profit. Data show that the client maintenance expense of CITIC Construction Investment Fund last year was 34,227,500 yuan, an increase of 23,2120,200 yuan or 210.67% compared with 11,017,300 yuan in 2019. The proportion of the management expense in CITIC Construction Investment Fund also rose from 18.94% in 2019 to 32.73% last year.

Meanwhile, in 2020, the sales and service fees and custody fees of CITIC Construction and Investment Fund will be 39.993 million yuan and 18.528 million yuan respectively, increasing by 7.8924 million yuan and 8.6594 million yuan respectively, or 24.59% and 87.79%, compared with 32.1006 million yuan and 9.8634 million yuan respectively in the same period of 2019.

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