The Investment Logic Of Xingzheng Capital

"The advantages of private placement of securities companies lie in their strong research ability and investment banking resources, which further form a deep understanding and professional ability of the real industry and the capital market. Through these two aspects of professional ability, we can form a moat and be able to compete with other social organizations. " Recently, during the 2020 China master fund summit and the second Lujiang venture capital forum, Xu Feng, President of Xingzheng innovation capital, said in an interview with the 21st century economic report.

It is understood that Xingzheng innovation capital (hereinafter referred to as "Xingzheng capital") was established in 2010, which is a private equity fund subsidiary wholly established by industrial securities. After 10 years of development, Xingzheng capital has become a private equity investment institution covering PE fund, M & A fund, financial consultant and other fund management businesses. It has built a professional, systematic, standardized and market-oriented private equity fund management ability in the aspect of raising, investment, management and withdrawal, with a total fund management scale of more than 7 billion yuan.

"At present, the IPO Exit rate of our projects exceeds 20%, which is very high in the industry." Xu Feng said. The investment philosophy and strategy of Xingzheng capital is not a straying layout, but a precise attack. At the same time, the requirements of internal risk control and other aspects are relatively high. This makes Xingzheng capital may miss some projects, but it also maintains a relatively high investment success rate.

Focus on four major areas and invest in mid and late stage projects

Xingzheng capital mainly focuses on the four major fields: medical health, new generation information technology, advanced manufacturing and large consumption. The company has built a professional team with rich investment experience in these four areas, and the representative projects invested include pilot intelligence, Chenguang stationery, Wande information, tostar, Huichang communication, etc.

Xu Feng said that Xingzheng capital is a private subsidiary of securities companies and also a state-owned capital. In addition to profitability, it also attaches great importance to the safety and liquidity of projects. The institution mainly invests in mid and late stage projects. The liquidity and safety of such projects will be relatively better. Although it may sacrifice a certain multiple of returns, it is more in line with the long-term and value investment philosophy of Xingzheng, and it is also the biggest responsibility to investors in the long run.

"Investment in mid and late stage projects does not mean that there must be tens of millions of profit projects. Some development prospects are clear and clear. Even if the income and profit are small at this stage, we will invest in them." Xu Feng said.

For example, in the field of medicine and semiconductor, many projects, not to mention profit, even have little income. But as long as the company can meet the market demand, with leading products, the future will be very promising. How to judge the growth of such projects? Xu Feng believes that at this time, in addition to the profound understanding and insight of the industry, we should also pay attention to the team itself.

On the one hand, we should pay attention to the past background and professional ability of the team, whether it has a professional background, whether it has successful experience, and whether it has cohesive force and combat effectiveness. On the other hand, it depends on the principle and method of doing things, whether they are on the right track or like to play the edge ball in business operation. "If the team's professional ability is strong, the values and methods of doing things are also very good, we think it is trustworthy." He said.

As for the implementation of the registration system on the gem, Xu Feng said that in the past, when there was no registration system, enterprises would not be delisted after listing, and even worse enterprises would have billions of shell value. However, after the implementation of the registration system, the situation has changed and the shell value no longer exists. "The deregulation of the registration system has helped to eliminate many factors that distort prices and strengthen our concept of long-term value investment." Xu Feng said.

The background of securities companies brings multiple resources and advantages

As a private subsidiary of securities companies, Xingzheng capital has its own characteristics and advantages in the private equity market.

Xu Feng said: first of all, Xingye securities branches, the parent company of Xingzheng capital, are all over the country, providing help for Xingzheng capital to find projects.

There are more than 5000 employees in the branches of Societe Generale Securities. These employees have been exposed to stocks for a long time and have strong learning ability for equity investment. When they encounter projects, they will naturally compare with listed companies, judge their value, and then provide good projects to Xingzheng capital. "So we have more than 5000 professionals in the country to help with the search and preliminary screening of projects, which is a great advantage." Xu Feng said.

From the perspective of capital market research, it is very helpful for us to have a more accurate capital research team to understand the securities market more quickly and have a strong research team in the securities market. Third, the investment banking business of Societe Generale Securities enables institutions to empower enterprises at all stages of enterprise growth and helps mature enterprises connect with the capital market.

"In recent years, Societe Generale Securities, the parent company of Xingzheng capital, attaches great importance to internal coordination, and has built a strong synergy system in the industry from the aspects of strategy, organization, business and assessment. As a result, our three competitive advantages are more prominent. " Xu Feng said.

In the fields of medicine and health, there is no lack of in-depth layout of industrial capital, which brings capital to the project and business resources at the same time. How does Xingzheng capital compete with it?

Xu Feng said that on the one hand, in terms of team building, Xingzheng capital also pays attention to the introduction of talents with industrial background. They also have rich industrial cognition and certain industrial network resources. On the other hand, Xu Feng believes that industrial capital investment is often multi-purpose, focusing on strategic coordination and resource integration, which is not necessarily what some start-up companies want to see. As a financial investor, the investment purpose of Xingzheng capital will be more simple, which is one of the reasons for the high success rate of exit.

In the future, equity investment will play an increasingly important role in supporting the development of the real economy. Regulators can adopt the same regulatory scale for social private placement and private placement by securities companies, so as to promote the securities industry to make greater contributions to the real economy.