On Jan 6, 2020, it is reported from Kangyue Technology Corporation (hereinafter called “Kangyue Technology” ) that its holding company, Shouguang Kangyue Investment Co., Ltd.(hereinafter called “Kangyue Investment”), signed a contract with Shengshi Fenghua Management Co.,Ltd.(hereinafter called “Shengshi Fenghua”) about 《Kangyue Technology’s Share Transfer Agreement》.
According to the agreement, Kangyue Investment will transfer 104,750,500 unrestricted common stocks (accounting for 29.90% of the company’s total shares) of its subsidiary company, Kangyue Technology, to Shengshi Fenghua, with the transfer price of 8.8486 yuan per share, RMB 926,900,000 yuan in total.
After transfer, Shengshi Fenghua will become the controlling shareholder of Kangyue Technology, and the company’s actual controller will be Wu Minwen and Ning Xinjiang.
Building A M&A Model of “PE + Listed Company”
In this typical M&A model, the PE firm (as GP), along with publicly listed company (as LP) or its major shareholders sometimes, sets up a specialized fund to acquire assets. After acquisition, the listed company maintains daily management, and PE is in charge of strategy planning, industry research analysis and resources integration, etc. Finally, PE firm will exit through the listed company until it matures.
Three advantages of the model:
1. Apart from commissions, PE will also gain premium from its investment depending on actual revenue and initial contract.
2. More efficient than listed companying stepping in the M&A process individually. At the same time, this model helps to increase leverage that less initial investment will be required.
3. Largely reducing the cost of information exposures, the listed company will only appear as LP.