Source: Visual China

Reporter丨Chen Jing

The sensational Everbright Securities MPS incident has the latest developments.

On June 11, Everbright Securities issued an announcement to disclose the MPS matters and follow-up situation of the wholly-owned subsidiary Everbright Capital.

The announcement shows that JINXINNC. (Cayman Baptist), the subject of overseas project transactions of Shanghai Baptist Fund, filed fraudulent false statements and breach of tax commitments with individuals and institutions such as RICCARDO SILVA ANDREA RADRZZANI, the original seller shareholder of MPS, in the High Court of England and Wales. The litigation claims that the amount involved is approximately US$661 million (approximately RMB 4.2 billion).

Everbright Securities said that the company’s business operations are currently normal.

Originating from MPS, China Merchants Bank and Huarui Bank invested 3.2 billion in total

What is the MPS project? How did Everbright Securities step on the thunder?

The matter dates back to four years ago. This series of disputes are all related to the “Storm” of the British sports copyright company MP&Silva (the “MPS” project) acquired by Baptist Fund, the executive partner of Everbright Baptist in 2016.

Everbright Baptist, a subsidiary of Everbright Capital, serves as the executive partner of Baptist Fund.

In 2016, Everbright Baptist and Baofeng Investment and Shanghai Qunchang launched the Baptist Fund with a fund size of 10 billion and a total maturity of 5 years. According to Tianyan Check, Baptist Fund has a total of 14 investors, of which China Merchants Wealth holds 53.82%, and Everbright Capital holds 1.15%. The executive partners of Baptist Fund are Shanghai Qunchang Financial Services Co., Ltd. and Everbright Baptist Hui, Baofeng (Tianjin) Investment Management Co., Ltd. Huarui Bank and Shenzhen Hengxiang are also partners of Baptist Fund.

In May 2016, Baptist Fund raised 5.2 billion yuan to complete the acquisition of 65% of MPS. MPS used to be the world’s top sports media company, with business covering more than 200 countries and regions around the world, with more than 90 global event property rights, and more than 30 event rights agency partners. LeTV Sports is its largest partner in China. Against LeEco, the Storm Group at the time also aimed at the sports sector, hoping to formally enter the sports industry.

Among the 5.2 billion yuan raised by the Baptist Fund, Everbright Capital contributed 60 million yuan as an inferior investor. The priority investor China Merchants Bank invested 2.8 billion yuan, and Huarui Bank invested 400 million yuan through Aijian Trust; other investors included Zhaoyuan Yongjin invested 600 million yuan, Shenzhen Hengxiang, Baofeng Department and Everbright Capital jointly invested billions .

In October 2017, MPS lost to rival IMG in the Serie A international copyright bid. In the same year, BeIN Sports took away the Ligue 1 copyright from MPS. Since then, MPS has been losing ground in the sports copyright market. Due to the inability to pay copyright fees, some major copyright owners terminated their contracts with MPS early and even took them to court. In October 2018, with the bankruptcy and liquidation order of the High Court of the United Kingdom, MPS became history. The 5.2 billion yuan investment was “flooded” and the investors encountered Waterloo.

Since then, many partners of the Baptist Fund have demanded compensation from the Everbright Department and the Baofeng Department.

In July 2019, Feng Xin, the actual controller of Baofeng Group, was arrested. Baofeng was in deep crisis and could not protect itself. Everbright Capital has become the main claim target of all investors. Everbright Securities’ 2018 annual report shows that the stakeholders of the Baptist Fund’s priority limited partners have presented a letter of replenishment stamped by Everbright Capital, promising that if the priority limited partners cannot exit, they will be funded by the inferior ones. People Everbright Capital assumes the corresponding obligation to make up the difference.

Everbright Capital was sued or arbitrated by China Merchants Bank, Zhaoyuan Yongjin and Huarui Bank, and Shenzhen Hengxiang, and the amount of “debt collection” involved exceeded 4.1 billion yuan. Among them, the amount involved in China Merchants Bank’s lawsuit against Everbright Capital is approximately 3.489 billion yuan, and the amount involved in arbitration applications for Huarui Bank and Shenzhen Hengxiang is 452 million yuan and 168 million yuan respectively. The arbitration initiated by Zhaoyuan Yongjin involved an amount of 100,000 yuan.

On May 31, 2019, Everbright Securities disclosed that the case was at the stage of filing and acceptance, and the impact on Everbright Capital could not be accurately estimated for the time being.

After the MPS incident, Everbright Securities also experienced a series of executive changes.

In April 2019, Xue Feng resigned as chairman and director of Everbright Securities, and Party Secretary Yan Jun replaced Xue Feng as chairman of the company. In January 2020, Liu Qiuming, the original chairman of CM Investment, was newly appointed as the president of Everbright Securities. The former president Zhou Jiannan resigned due to personal reasons. Several senior executives, including the chief risk officer, compliance director, business director and directors of Everbright Securities, have also changed.

Everbright Securities is also constantly trying to hold Storm Group responsible. In April 2020, Everbright Securities disclosed the result of the first instance of the MPS case. The Shanghai Financial Court ruled that Everbright Capital, a wholly-owned subsidiary of Everbright Securities, should pay approximately 3.116 billion yuan to China Merchants Bank and interest from May 6, 2019 to the date of actual settlement. Loss, and bear part of the litigation fees, property preservation fees and other expenses; pay the investment principal of 400 million yuan to Huarui Bank, pay the investment income from January 1, 2018 to the date of actual performance, and bear litigation fees, preservation fees, etc. Currently, Everbright Capital has filed an appeal, and the relevant litigation is still in the process of performing judicial procedures.

MPS risks are fully accrued, and China Everbright is stepping out of the haze

Following a sharp rebound in performance in 2019, Everbright Securities has achieved a three-fold increase in net profit in 2020.

According to the company’s annual performance report released on March 25, the company achieved a total of 15.866 billion yuan in operating income in 2020, an increase of 58% year-on-year, and a net profit of 2.334 billion yuan attributable to the parent, an increase of 311% year-on-year.

However, dragged down by the MPS incident, Everbright Capital has suffered three consecutive years of performance losses in 2020, with losses of 1.634 billion yuan and 2.909 billion yuan in 2018 and 2019, respectively. As of December 31, 2020, Everbright Capital had total assets of 2.980 billion yuan, net assets of 2.442 billion yuan, and losses of 2.069 billion yuan.

Everbright Securities accrued a liability of 1.55 billion yuan for MPS matters in 2020. In the past two years, it has accrued liabilities of 3.011 billion yuan. Up to now, Everbright Securities has accrued liabilities of 4.565 billion yuan for MPS. In the MPS incident, the largest amount of funds contributed by the stakeholders of the two priority partners-China Merchants Bank and Huarui Bank. According to the announcement on the judgment of the first instance disclosed by Everbright Securities, in addition to the priority principal, a certain amount of interest must be paid. However, as far as the current situation of Everbright Securities’ accrued accrual is concerned, Everbright Securities has made a full accrual for this matter.

Everbright Securities stated that since the occurrence of the MPS incident, the company has deeply analyzed the problems reflected in the risk event, focusing on comprehensively recreating the style from improving the risk management system, achieving full coverage of risk management, implementing the responsibilities of relevant personnel at all levels, strengthening professional management and expert decision-making, etc. Control compliance system. The company has carried out a series of risk investigations and rectifications, comprehensively strengthened the management and control of subsidiaries, further built a sound and prudent risk culture, improved the risk compliance system, and improved risk prevention and resolution capabilities. Judging from the 2020 annual results announcement disclosed by Everbright Securities, the company has stepped out of the haze of MPS risk events, the risks have been basically cleared, and the company’s development will become more healthy.

“Technological innovation” has become a hot topic in the Internet industry. What kind of innovation is the innovation that a technology company should have? Through “China Innovation Company 100”, we try to answer these questions.

Recently, Sohu Technology held the first phase of the “China Innovation Company 100” chip series salon event. Liu Leibo, long-term professor of Tsinghua University and distinguished professor of Changjiang Scholars, Wu Youwen, vice president of Wingtech Technology, and Zhao Zhanxiang, partner and chief technology officer of Yunxiu Capital, discussed the new opportunities for domestic substitution under the global core shortage. This article is a wonderful view shared by Zhao Zhanxiang at the salon.

Zhao Zhanxiang, partner and chief technology officer of Yunxiu Capital, participated in the online salon discussion

Produced | Sohu Technology

Author | Liang Changjun

Edit | Yang Jin

Under the global core shortage, the domestic semiconductor primary market is still hot. Recently, at the first phase of the “China Innovative Company 100” chip series salon held by Sohu Technology, Zhao Zhanxiang, partner and chief technology officer of Yunxiu Capital, mentioned that in the past two years, investment institutions have begun to look at semiconductors, and many are rushing to pre- -IPO projects, but some institutions are not pure investment, but are highly speculative.

This wave of intensified core shortages does not seem to affect the market’s pursuit of semiconductors, but the impact on enterprises is real. Zhao Zhanxiang said that compared with the shortage of memory chips in 2016 and 2017, this time there is a shortage of cores in the entire industry, which is relatively rare, and has a different impact on each link in the industry chain.

For terminal manufacturers, relying too much on a certain supplier may be affected to a certain extent; design companies and Foundry (chip foundries) with production capacity or stocks on hand can adjust their product structure and prioritize production of high profitable ones. Products, earn more money; some start-up companies are expected to get the opportunity to enter the supply chain of major customers; the most influential companies are those that have no capacity before and want to take capacity temporarily.

For investment institutions, in addition to listing, mergers and acquisitions are also an important exit path, but the current domestic semiconductor mergers and acquisitions are not active. Zhao Zhanxiang believes that in a few years, the number of mergers and acquisitions by Chinese semiconductor companies will be very large, and the scale will gradually increase. Now there are three or four thousand domestic chip companies, and it is expected that in 10 years, there will be more than 50 companies with a market value of more than tens of billions. US dollars, in which many mergers and acquisitions will occur.

Different types of companies have different merger strategies. He said that mergers and acquisitions of digital chip companies are often for the deployment of new products or next-generation technologies-taking time to do it yourself, it is easy to miss the time window, and it is better to acquire start-up companies that have done better. M&As of analog chip companies are more to expand product lines. The more products and the more complete they are, the easier it is to be favored by customers, but a company often cannot do it all by itself.

In the salon exchange, Zhao Zhanxiang also shared his views on the core manufacturing of major Internet companies from the perspective of investment. He believes that domestic Internet companies must first solve the business model problem of making cores. Either turn the chip into a product that helps the company make money, or invest in an independent chip company outside and have a certain control over it. These companies can also use their own The platform is growing rapidly, and the latter is a better way.

Regarding the investment opportunities under the domestic substitution, Zhao Zhanxiang said that now semiconductor investment has entered the deep water zone, all the good fruits have been picked, and the rest are difficult to pick. He mentioned that since the beginning of this year, investment institutions are also focusing on areas with deep moats, low localization rates, and large capital needs, such as large chips such as CPUs and GPUs, and EDA.

In addition, IDM-based domestic memory chip manufacturers and third-generation compound semiconductor manufacturers have also raised large amounts of financing this year; automotive sensors, radars, and high-end chips in the industrial field are also very hot, with high thresholds. , Has the ability to expand horizontally in the future.

He also called on the state to have more policy support for chip companies that are willing to sit on the “cold bench”, difficult and long-cycle chip companies, and investment institutions should be more patient and pay attention to more early stage and greater value for China’s innovation. the company.

The following is Zhao Zhanxiang’s sharing record (deleted and sorted out)

Sohu Technology: You have been in contact with many startups. What impact does the current lack of cores have on them?

Zhao Zhanxiang:The impact of the lack of cores on each link of the industry chain, such as terminal manufacturers, intermediary agents, chip design companies, and Foundry (chip foundry), is different. For terminal manufacturers, relying too much on a certain supplier will be affected. For example, a certain chip of a mobile phone manufacturer has always come from one supplier. Suddenly the capacity of this supplier is tight. At this time, it is difficult to transfer to another supplier. Without a long-term cooperative relationship, the other party will not temporarily give you the capacity. .

When I made memory chips myself, it was normal to be out of stock, especially memory chips have a very strong periodicity. For example, in 2016, NAND FLASH (flash memory) was in short supply globally; in 2017, DRAM (memory) chips were in short supply globally, and the price increased seven times. If the agent has gone through this cycle, it can predict the situation of tight production capacity and stock up in advance.

For design companies and Foundry, if it is a company that has production capacity or stocks on hand, it actually hopes that it lacks cores and raises prices, so that its profits will be higher. If there is a relatively stable supply of production capacity, the response to the shortage of cores will be adequate. Although the production capacity cannot be further increased, the proportion of some high-margin products can be expanded. In this way, although the overall sales revenue volume does not grow so fast, the gross profit increases, and the final profit margin will increase.

In addition, under the current situation, large customers are also willing to introduce new suppliers, which is just an opportunity for some start-up companies. But it does have an impact on small, low-capacity companies, and these companies still have to reserve cash for the winter at this point in time. The biggest impact of the lack of core is that companies that did not have production capacity before, and want to temporarily take production capacity, now it is difficult to squeeze production capacity.

Sohu Technology: There were also global core shortages in 2016 and 2017. What is the difference between this time and the previous ones?

Zhao Zhanxiang:The semiconductor industry has been cyclical since its inception, and it is difficult to fundamentally solve the lack of core tide. The core reason is that it takes more than a year for semiconductor production capacity expansion, but demand is increasing rapidly. In 2016, NAND FLASH shifted from 2D technology to 3D technology. 2D production capacity was partially withdrawn and turned to 3D. However, the yield rate of 3D did not increase, resulting in a decrease in market supply, and increased demand for mobile phones and data centers. PC SSD (solid state) Hard drives) have increased in capacity and demand soared. This is the same as the memory shortage in 2017, which is an imbalance between supply and demand.

This time there is a shortage of cores in the entire industry, which has a lot to do with the epidemic and the rapid spread of 5G mobile phones. Market demand has increased and supply cannot keep up. This kind of large-scale core shortage is relatively rare, and companies need to prepare in advance to stock up in advance when there is a sign of core shortage. In addition, the financial strength must be large, and a long-term cooperative relationship with the fab is also required.

Sohu Technology: How do you view the opportunities for domestic substitution from the current shortage of cores? How to treat the current level of localization?

Zhao Zhanxiang:What domestically produced substitutes have to solve is the stuck neck problem. Now the good fruits of the semiconductor industry have been picked, and the rest are more difficult to pick, such as CPU, GPU, DSP, FPGA, and memory chips NAND FLASH, DRAM and other fields with a low localization rate. These localization rates in the next ten years need to exceed 50% or even higher, which is a very difficult task.

Semiconductor manufacturing equipment and materials currently have the greatest impact on the neck. China can now build lithography machines, but it is relatively low-end and can only do 90nm. Once the key materials, key EDA tools used for designing chips, and IP are blocked, it will have an impact on the industry. It is also very large, and it is urgent to realize domestic substitution.

On the other hand, my country’s innovation fields need to be synchronized with the world, such as quantum chips, photonic computing, and new sensors in mobile phones. Now we are faster in the iterative speed of new technologies than abroad, the pace of work is faster, capital investment, human investment are stronger, there are reasons to be more confident in our level of innovation.

Sohu Technology: Semiconductor investment has been very hot since last year. Under the tide of domestic substitution, what are the relatively large investment opportunities?

Zhao Zhanxiang:Yunxiu Capital has been paying attention to the semiconductor industry very early. According to our observations, there were not many investment institutions that looked at semiconductors before 2017. After the ZTE Huawei incident, many institutions began to look at this field. Semiconductors are not only a policy-oriented market, but there is really strong market demand. Large domestic customers used to have only the top three suppliers in the world, but now they also want to supply the domestic supply chain. This is a big market opportunity.

After the establishment of the Sci-tech Innovation Board, semiconductor companies performed very well on the Sci-tech Innovation Board. Although the number of the SCI-Tech Innovation Board accounted for only 15%, the total market value exceeded 30%. Last year, the market value increased by an average of 40%. Due to the popularity of the science and technology innovation board, the amount of investment in the primary market of semiconductors last year exceeded 140 billion yuan, a nearly five-fold increase compared to 2019. Last year’s primary market equity investment enthusiasm was mainly concentrated in Pre-IPO projects, but their valuations are very high, and the return on exit may not be that large. Everyone is going to grab the Pre IPO quota. It is no longer pure investment, but very speculative.

This year, many investment institutions are focusing on areas with deep moats, low localization rates and relatively large capital needs, such as large chips such as GPUs and CPUs, and companies in areas such as EDA software. IDM’s financing this year is also very large. Many domestic memory chip manufacturers and third-generation compound semiconductor manufacturers are all in the IDM model. Subdivision areas have also attracted much attention, such as automotive sensors, radars, and high-end chips in the industrial field. The threshold is very high, and the future has the ability to expand horizontally.

Sohu Technology: For investment institutions, mergers and acquisitions are also an important exit path. What do you think of the M&A trends in China’s semiconductor industry?

Zhao Zhanxiang:Last year, global semiconductor mergers and acquisitions were very hot, and the overall capital estimate exceeded 100 billion U.S. dollars. M&As of overseas giants often lie in their strategic layout. There are not so many domestic mergers and acquisitions, but now there are three or four thousand domestic chip companies. In 10 years, there will be more than 50 companies that will become tens of billions of dollars. There will be many mergers and acquisitions. Integration occurs mainly due to three factors:

First, the market value of leading companies in the industry is relatively high, and they need to install new assets to support their stock prices; second, digital chip companies need to lay out the upstream and downstream industrial chain, and analog chip companies need to increase product lines in order to continue to expand; third , The future liquidity of small market capitalization companies on the Science and Technology Innovation Board may not be so good, and capital withdrawal after listing may not be ideal. It is better to sell to large companies for cash in advance. Therefore, the number of mergers and acquisitions of Chinese semiconductor companies in the future will be very large, and the scale will gradually increase.

Sohu Technology: If domestic chip companies become bigger and stronger, are mergers and acquisitions necessary? What are the differences in M&A strategies for different types of companies?

Zhao Zhanxiang:The threshold of the semiconductor industry is very high. If you do not acquire, you need to do it yourself from scratch, and the time and cost to spend is very high. So now many companies are willing to go overseas mergers and acquisitions, because overseas companies have already accumulated a lot. However, the ultimate goal of the acquisition is either for technology or for the team, but if it cannot be digested, the value of the acquisition will not be that great.

From the perspective of the development of technology companies, it is common for large companies to acquire small companies, but the acquisition strategies of digital chip companies and analog chip companies are different. Digital chip company acquisitions are often for the layout of the next product or next-generation technology. There are many new directions, and it is impossible to invest heavily in research and development for each. Instead of spending four or five years trial and error, it is better to acquire a ready-made company so as not to miss the time window.

Many times analog chip companies merge to expand their product lines. China’s largest analog chip company now has thousands of product lines, and giant companies such as TI and ADI have tens of thousands of product specifications, which is convenient for customer supply chain management and has a great advantage in winning customers. Therefore, for domestic analog chip companies, the future will definitely increase product lines through mergers and acquisitions.

Sohu Technology: From an investment point of view, how do you think about the Internet to make cores? What problems will you face?

Zhao Zhanxiang:Internet companies must first solve the business model problem for core manufacturing. Internet companies may only need hundreds of thousands or millions of chips a year, while the chip industry has technological iterations every year, and the annual investment in new products is high or even doubled. How can Internet manufacturers bear the cost? Strength to feed the chip team? This is difficult commercially.

Foreign Google and Amazon are very successful in making chips. They are not made to digest the chips by themselves and reduce costs, but are strategic layouts. Through self-developed chips, the number of virtual machines supported by a single machine increases, and then the services are sold to cloud computing customers. , To recover the cost of the chip through service.

How do domestic Internet companies recover the cost of making chips through services? Either through business model innovation to turn the chip into a product that helps the company make money, or invest in an external independent chip company to have a certain degree of control over it, and let them grow quickly with their own platform. This is a better way.

Sohu Technology: Do you have any suggestions for promoting the development of China’s chip industry and domestic substitution?

Zhao Zhanxiang:The Sci-tech Innovation Board needs to continue to encourage high-quality loss-making companies to be listed. The development cycle of chips is very long, and it is difficult to generate tens of millions or hundreds of millions of profits in the short term. If these companies are required to make profits before they can go public, everyone is not willing to make difficult chips, but will be short and fast, attracting speculative people. , This is bad for the industry.

The country needs to have some policy inclination for companies that are willing to sit on the “cold bench”, with long cycles and high difficulties. Many institutions now tend to invest in Pre IPO projects for short-term IPOs and exits. This is not very helpful for many innovative companies or companies that really need money. Therefore, I also hope that the exit cycle of investment institutions can be longer and be patient to invest in earlier and earlier, Companies with greater innovation value to China.