Head venture capital issues bonds to support technological innovation

On March 3, two leading venture capital companies, Shanghai Science and Technology Venture Capital Group and Zhongguancun Development Group, disclosed their issuance announcements on the Shanghai Stock Exchange, and filed for the issuance of technology innovation bonds totaling 1.5 billion yuan.

On March 3, two leading venture capital companies,

Shanghai Kechuang Investment Group plans to issue 21 Kechuang K1 (175828.SH) with a term of 2+1 years. The main body rating and debt rating are both AAA, the coupon rate is preset between 3.2% and 4.2%, and the lead underwriter is Guotai Junan. The funds raised by the Shanghai Science and Technology Venture Capital Group will be used to supplement the Shanghai Integrated Circuit Industry Investment Fund, focusing on solving the “stuck neck” technical problem.

Zhongguancun Development Group plans to issue 21 Zhongguan 01 (175785.SH) with a term of 3 years. The subject rating and debt rating are both AAA, and the coupon rate is preset to range from 3.2% to 4.2%. Lead underwriters include CITIC Construction Investment and CITIC Securities , China Merchants Securities. The funds raised by Zhongguancun Development Group will be mainly used to supplement various frontier science and technology investment funds, and fully support frontier fields such as electronic information, medicine and health, artificial intelligence, big data, integrated circuits, and intelligent manufacturing.

The issuance of technological innovation bonds by the two venture capital companies is based on the overall framework of the entrepreneurial and entrepreneurial bonds, and special bond financing methods are used for technological innovation companies that meet the key national support industries to promote the innovation and upgrading of entity companies. In 2018, the China Securities Regulatory Commission issued the “Guiding Opinions of the China Securities Regulatory Commission on the Implementation of Pilot Bonds for Innovative and Entrepreneurial Companies”, which set requirements for the launch of the pilot work of dual innovation bonds. The “Guiding Opinions” clarify that the main issuers of innovative and entrepreneurial corporate bonds are innovative and entrepreneurial companies, as well as corporate venture capital funds and venture capital companies that raise funds to invest in innovative and entrepreneurial companies. At the same time, the new regulations also support the establishment of debt-to-equity swaps for entrepreneurship and entrepreneurship. . The “Guiding Opinions” hope that through the launch of innovative and entrepreneurial corporate bonds pilots, the capital market will promote precise services for innovation and entrepreneurship, optimize the capital formation mechanism of innovative and entrepreneurial enterprises in the seed, start-up, and growth stages, effectively increase the financial supply for innovation and entrepreneurship, and improve the financial supply structure , To explore a new model for the exchange bond market to serve the real economy, and to promote the capital market to better serve the supply-side structural reform.

The government guidance fund of our country is very large and grows rapidly every year. The current source of funds for government guidance funds is mainly the funds arranged by the financial department through general public budgets, government fund budgets, and state-owned capital operating budgets. However, with the economic slowdown, the guidance fund also needs to find new and stable sources of funding. The concept of fund bonds also came into being, or will become the new main funding channel for guiding funds. Fund bonds refer to bonds issued by state-owned enterprises approved by the National Development and Reform Commission and mainly used to contribute to the fund.

On September 19, 2018, the National Development and Reform Commission issued the approval for the issuance of corporate bonds by Zhejiang State-owned Capital Operation Co., Ltd. (Fagai Enterprise Bond [2018] No. 139), which became the first fund bond approved after the “New Asset Management Regulations” . The National Development and Reform Commission approved the Zhejiang State-owned Capital Operation Co., Ltd. to issue 1.5 billion yuan of bonds to contribute to the “Guoxin Guotong Fund Phase I” (hereinafter referred to as the “Guoxin Guotong Fund”). The bond was listed and traded on the inter-bank market and the Shanghai Stock Exchange on December 19, 2018, with a maturity of 5 years and a coupon rate of 4.15%. The Guoxin Guotong Fund was approved by the State-owned Assets Supervision and Administration Commission of the State Council, with a total scale of 150 billion yuan, and the first phase of 70 billion yuan. It is entrusted to Guoxin International Investment Co., Ltd. to manage it and registered in Hangzhou, Zhejiang Province. The fund adheres to market-oriented operations, and provides RMB funds and professional support for Chinese enterprises to participate in the construction of the “Belt and Road”, promote international cooperation in production capacity and equipment manufacturing, and carry out international investment mergers and acquisitions, in pursuit of long-term stable investment returns.

On February 2, 2019, the National Development and Reform Commission approved the application of Hubei Science and Technology Investment Group Co., Ltd. (hereinafter referred to as “Hubei Science and Technology Investment”) to issue 3 billion yuan of corporate bonds. The bond has a maturity of no more than 15 years and adopts a fixed interest rate. The raised funds of 400 million yuan will be used to contribute to the CICC Qiyuan National Emerging Industry Venture Capital Guidance Fund (Limited Partnership), and 1.8 billion yuan will be used to contribute to the Wuhan Guanghua Semiconductor Display Industry Development Fund. The partnership (limited partnership) contributed 200 million yuan to Wuhan Optics Valley Fiber Optics Information Industry Investment Fund Partnership (Limited Partnership), and 500 million yuan to Hubei Xiaomi Yangtze River Industry Fund Partnership (Limited Partnership). 100 million yuan will be used to contribute capital to the Hubei Province Lenovo Yangtze River Science and Technology Industry Fund Partnership (Limited Partnership). Based on this approval, Hubei Ketou issued two bonds, 19 Eke Investment Bond 01 and 19 Eke Investment Bond 02 on March 8, 2019 and May 5, 2019, respectively, and the coupon rates of the two bonds were 4.75%. And 5.00%. Hubei Science and Technology Investment Group Co., Ltd. was established in July 2005. It is funded and established by the East Lake High-tech Zone Management Committee. It is responsible for the “major infrastructure construction, industrial park construction, key industry investment, technology financial services, state-owned State-owned enterprises with five functions of “asset operation”.

In addition to state-owned institutions, venture capital companies listed on the Third Board have also used bond financing. Tiantu Investment successively issued 17-day Tu 01 and 17-day Tu 02 bonds for financing in 2017. All the funds obtained are invested in the equity of entrepreneurial and innovative companies in the seed stage, start-up stage, and growth stage through direct investment, or the establishment of contractual funds, corporate funds, and the establishment of limited partnerships. The two bonds are rated AAA, with a maturity of 3+2 years and a coupon rate of 5.8%. Compared with other financing channels, bond financing greatly reduces financing costs.

Raising funds from funds through fund bonds can effectively broaden the overall fund-raising channels, and at the same time effectively reduce financing costs based on the overall liquidity of the bond market.

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