China Fund News Taylor
Capital Market’s “Prison Storm” has updated another episode.
Yesterday, Shanghai beach boss Dai Zhikang chose to surrender due to the P2P explosion. Tonight another boss was officially arrested by the Shanghai Jing'an District Procuratorate. It is Feng, the head of Storm Group , who is well-known in the A-share market. Xin.
Feng Xin, the legal representative of Baofeng Group, was arrested
html On the evening of September 2, big news came again from Shanghai. Recently, the Jing'an District Procuratorate charged the suspect Baofeng Group Co., Ltd. with the crime of bribery of non-state personnel and the crime of job embezzlement. Legal representative Feng Xin approved the arrest. The case is under further processing.Feng Xin has actually been taken compulsory measures by the police. On July 28, Baofeng Group issued an announcement stating that Mr. Feng Xin, the actual controller of the company, was taken compulsory measures by the public security organs on suspicion of committing a crime. The relevant matters are yet to be further investigated by the public security organs. investigation.
As for why the public security organs took compulsory measures? In response to an inquiry from the Shenzhen Stock Exchange on July 31, the company announced that according to the "Detention Notice", Feng Xin was detained by the public security organs on suspicion of bribing non-state personnel.
Baofeng Group said that on July 23, the public security organ notified Assistant Feng Xin to go to the post office where Feng Xin’s household registration was to collect family notification letters. Assistant Feng Xin informed Feng Xin’s immediate family members. On July 24, Feng Xin's immediate family members issued a direct relative certificate in Shanxi, and Feng Xin's assistant took a train to collect the direct relative certificate. On July 25, Assistant Feng Xin received the family notification (i.e., the "Detention Notice") at the post office where Feng Xin's household registration is located using the certificate of immediate family members and copies of the ID cards of the immediate family members and other materials, and informed the company. On July 25, the company received the "Detention Notice". After learning of the matter, the company disclosed information in accordance with regulations.
html From heaven to hell in 54 years
On March 24, 2015, Baofeng Group landed on the GEM. This was the highlight moment for Feng Xin and Baofeng.
owned Baofeng Video, the largest video player in China at the time, and it coincided with the capital craze of the Internet. Baofeng pulled out 34 daily limits in the following 40 days, which was astonishing and became a unique GEM "stock." "King", the stock price reached 327 yuan at its highest, the market value exceeded 40.7 billion yuan, and the PE was 1,000 times. The book wealth of founder Feng Xin exceeded 10 billion.
But now, Baofeng’s market value is only 1.6 billion, a 96% drop. Feng Xin's 21.34% personal stake in Baofeng Group has been 100% pledged. He is burdened with huge debts and has become a "laogui".
html In 2004, how did Feng Xin and Baofeng go from heaven to hell?Baofeng Group faces the risk of listing suspension
html On August 29, Baofeng Group issued a first-half financial report reminder that the Shenzhen Stock Exchange may suspend the company's stock listing. The semi-annual report ofshowed that it achieved revenue of 83.5929 million yuan, a year-on-year decrease of 89.44%; the net profit attributable to shareholders of listed companies was -2.6400 million yuan, a loss of 106 million yuan in the same period last year. The
report also shows that as of June 30, 2019, the company's consolidated financial statements had current assets of 486 million yuan and current liabilities of 2.083 billion yuan. Among them, the net loss attributable to the owners of the parent company of the subsidiary Baofeng Intelligence in the first half of the year was 87.4291 million yuan. As of June 30, 2019, the current assets were 356 million yuan and the current liabilities were 1.6864 billion yuan. The existence of the above matters may lead to uncertainty about the company's ability to continue operating, and the company has the risk of negative net assets attributable to shareholders of listed companies at the end of 2019 after audit.
It is worth noting that according to Article 13.1.1 Item (3) of the "Shenzhen Stock Exchange GEM Stock Listing Rules" "The financial accounting report of the most recent year shows that the audited net assets at the end of that year were negative, the Shenzhen Stock Exchange "can decide to suspend the listing of its stocks". If the company's audited financial accounting report for 2019 shows that the net assets at the end of 2019 are negative, the Shenzhen Stock Exchange may suspend the listing of the company's stocks.
It is understood that Feng Xin has not resigned as the legal representative of Baofeng Group and is still the company’s controlling shareholder and actual controller.Data show that on August 29, 2019, Feng Xin was listed as a dishonest executor due to violation of the property reporting system. There were as many as 94 personal risks related to Feng Xin, and as many as 1,123 related risks, and he was included in restrictions many times. High consumption. After
was arrested, no one even attended the shareholders’ meeting.
html On the evening of August 15, Baofeng Group issued the “Announcement on Resolutions of the Third Extraordinary Shareholders’ Meeting in 2019.”This announcement shows that the host of the meeting is Ms. Luo Yibing, the director. Feng Xin was unable to preside in person due to personal reasons, and the company did not have a vice chairman. A total of 5 shareholders and proxies attended this meeting, representing 9,603 shares of 132html with voting rights, accounting for 0.0409% of the total number of shares with voting rights of the company.
Among them, 0 shareholders and proxies attended the on-site meeting, representing 0 shares with voting rights, accounting for 0% of the company’s total voting shares; 5 shareholders participated in online voting, representing 9,603 shares with voting rights 132html, accounting for 0% of the company’s total voting shares. 0.0409% of the company’s total voting shares.
In other words, no shareholders showed up at the shareholders meeting that day.
As of the latest data, Baofeng Group still has nearly 70,000 shareholders.
Why was Feng Xin arrested?
The procuratorate said that Feng Xin was suspected of bribery of non-state personnel and job embezzlement. There is a saying in the
market that it is related to Everbright Securities and China Merchants Bank . According to
, Feng Xin’s arrest this time mainly involves the British sports copyright company MPSilva Holdings S.A. (hereinafter referred to as “MPS”), which was jointly acquired by Storm Group and Everbright Capital in 2016. Feng Xin was involved in the financing process of this project. Bribery.
The above report stated that there are 8 people involved in the control measures taken by relevant authorities. These 8 people include both internal staff and former staff of Baofeng Group, as well as those who worked for Feng Xin during the MPS merger and acquisition process. People outside the company where Xin works.
According to Caixin, as early as April this year, Xiang Tong, who resigned from Everbright Capital, was arrested by the prosecutor's office on suspicion of criminal offences. According to " China Business " report, Xiang Tong received more than 10 million yuan in kickbacks in the MPS case.
Fund Manager has reported on this matter before, and I would like to review it with you.
In 2016, just over a year after Baofeng Group went public, he, who was known as a monster stock, announced that he would cooperate with Baofeng Investment, Everbright Jinhui Investment Management (Shanghai) Co., Ltd., Shanghai Qunchang Financial Services Co., Ltd. and other limited partners. , plans to sign the "Shanghai Jinxin Investment Consulting Partnership (Limited Partnership) Limited Partnership Agreement", Jinxin Investment targets to raise RMB 5.203 billion.
After the completion of this capital increase, Baofeng Group subscribed for a total capital contribution of RMB 200 million from Jinxin Investment as a limited partner, Baofeng Investment subscribed for a total capital contribution of RMB 1 million from Jinxin Investment as a general partner, and Everbright Jinhui as a general partner The partners subscribed to a capital contribution of RMB 1 million from Jinxin Investment. Shanghai Qunchang subscribed to a capital contribution of RMB 1 million from Jinxin Investment as a general partner. The other limited partners subscribed to a total capital contribution of RMB 5 billion from Jinxin Investment.
At that time, sports copyrights were sought after, and LeTV Sports' financing speed and scale were unparalleled. Baofeng Group also launched Baofeng Sports products. With the help of funds, Feng Xin turned his attention to mature overseas sports copyright trading companies. In May 2016, Jinxin Fund acquired 65% of the shares of MPSilva, the "top international sports media service company".
The leverage of this acquisition fund is relatively high. Among them, China Merchants Bank is the top priority, with 2.8 billion. The 60 million yuan and 200 million yuan invested by Everbright Capital and Storm Group as LPs respectively are inferior investments.
turned out to be a big deal. The consortium composed of China Merchants Bank, China Everbright, and Baofeng wanted to make a big deal, but they were cut off by the company founded by an Italian. Information released by
at the time showed that MPSilva was founded by three Italians and is the world's top sports media service company. It has 20 branches around the world. As of June 2015, its annual turnover exceeded US$600 million. Its core business It is the acquisition, management and distribution of sports event rights, covering major national teams, clubs, leagues and well-known events.
As one of the investors, Xue Feng, then CEO of Everbright Securities, commented that this was “an unforgettable experience.” He said: “China has the largest number of sports fans, and the sports industry has become one of the hottest investment areas at the moment. . ”
However, after Shanghai Jinxin took over, MPS went on a decline, and the copyrights and contracts with related sports leagues continued to be lost. In October 2017, MPS lost to competitor IMG in the bidding for the international copyright of Serie A . This was the first time that MPS lost the Serie A copyright since its establishment. In the same year, BeIN Sports also took away the Ligue 1 copyright from MPS. Since then, MPS has been losing ground in the sports copyright market, and due to its inability to pay copyright fees, some of the major copyright owners terminated their contracts with MPS early, and some directly took it to court. MPS's production and operation were in dire straits.
The last straw for MPS came from the French Tennis Federation (FFT). On October 17, 2018, upon application by FFT, the British High Court ordered MPS to be placed into bankruptcy liquidation. The reason for FFT's application was that MPS had not paid it £5 million (US$6.6 million) in royalties. It is hard to imagine that a copyright fee of tens of millions of yuan could crush a company valued at 7.2 billion yuan, less than 2 and a half years after it was acquired.
5.2 billion fund, a vigorous cross-border acquisition, why did it fail miserably? The acquisition seemed to be a great value for money, but it laid a landmine in terms of due diligence.
According to media analysis, there are the following factors.
1. The international sports event copyrights held by MPS at that time actually had limited appeal to the Chinese market - Serie A, French Ligue 1, Scottish Premier League and other leagues had relatively low attention in the domestic market, while MPS's Premier League copyrights were limited to Asia Pacific excluding China.
2. When it was acquired by Chinese capital, most of the major sports copyrights in the hands of MPS were facing the problem of expiring soon. Among them, the copyrights of Serie A and Ligue 1 end in 2018, while the copyright contracts with the Premier League, Arsenal club and F1 are signed until 2019, and the French Open, which has the longest contract, ends in 2021. The lack of continuity of copyright has also become a major concern after Chinese acquisitions.
3. After the acquisition, China failed to sign a good non-compete agreement with MPS, which resulted in the three founders of MPS actually running away after receiving a large amount of cash.
As early as August 2015, Radrizzani and Silva had reduced their shareholdings in MPS from controlling to non-controlling. When
was acquired, there were no non-competition provisions for core personnel. The business model of MPS determines that its business development is highly dependent on important figures in the company. For such companies, experienced acquirers will generally impose non-compete provisions on relevant core personnel, such as company executives, core talents, etc. during the acquisition, requiring these people to stay within a certain period of time after the acquisition is completed, such as 3 years or 5 years. During the year, they are not allowed to engage in business in the same industry, or certain rewards, options and other incentives are given to retain key minorities to achieve a smooth transition and safeguard the interests of the company. However, Everbright Capital and Baofeng Technology did not seem to have made corresponding arrangements during the acquisition. Radrizzani, the founder of
MPS, founded Eleven Sports, a sports broadcasting company as early as 2015, which owns the broadcasting rights for Serie A, La Liga, Eredivisie and the Chinese Super League in the UK. After being acquired, Radrizzani bought the English Championship team Leeds United in 2017. Riccardo Silva, another founder of MPS, also bought the American second-level professional football league team Miami FC in 2017, and became a shareholder of the Serie A giant AC Milan club in 2018. The actions of the two founders will obviously have an impact on the production and operations of MPS after the acquisition.
4. There is a lack of effective operation and management methods for MPS.
After acquiring MPS, Everbright Capital and Baofeng Technology seemed to lack sufficient and effective means and methods on how to operate and manage this industry giant, which led to "disunion" among personnel. When the FFT sued MPS, it received the endorsement of former MPS CEO Jochen Lsch and MPS auditor Grant Thornton; MPS Singapore CEO Seamus Ober Seamus O'Brien joined MPS in January 2018 and resigned after just 7 months.The actions of these senior managers all reflect that MPS has fallen into difficulties in production and operation management, and has many conflicts with shareholders.
In October 2018, MPS was declared bankrupt and liquidated by the British court, and the company's assets and income will be used to repay creditors. Jinxin Fund failed to exit as planned, which exposed the fund to greater risks.
Tianyan check information shows that in addition to Baofeng Investment, Everbright Capital, and Everbright Jinhui, Jinxin Fund also has 11 LPs. The investors behind it are China Merchants Bank, Huarui Bank , Oriental Assets, Jupai Investment and State-owned assets in Yunnan and Guizhou provinces both suffered from shortfalls.
The largest investment was China Merchants Wealth, which invested 2.8 billion yuan in financial management funds. Immediately afterwards, Jiaxing Zhaoyuan Yongjin Equity Investment Fund and Aijian Trust invested 600 million yuan and 400 million yuan, of which Aijian Trust was only a channel and the actual investor was Huarui Bank. In addition, seven institutions including Langtaosha Investment, Shenzhen Kehua Investment, and Shanghai Longqian Yingshen Investment invested hundreds of millions.
According to multiple announcements and public information released by Everbright Securities and Baofeng Group this year, the earliest key node was on March 2, 2016, when Baofeng Group, Feng Xin and Everbright Jinhui signed an agreement of intent "About Repurchase Agreement for the Acquisition of Equity Interests in MPSilva Holding S.A."
The specific content of this agreement has not been disclosed in detail, but the general idea is that, under compliance conditions, in principle, within 18 months after the United Fund completes the acquisition of MPS, Storm Group and Feng Xin will complete the acquisition of MPS. Repurchase of this asset. Judging from the environment at the time, this largely meant integrating it into the main body of a listed company. Everbright Capital and Everbright Jinhui stated that Feng Xin issued a "Letter of Commitment" to them at that time.
In other words, according to the original agreement, Baofeng Group and its head, Feng Xin, guaranteed Everbright Capital’s investment and promised to inject it into the listed company after the MPS acquisition. However, less than three years after the acquisition, MPS went into bankruptcy and liquidation. Baofeng Group had already fallen from the altar and was unable to fulfill its promises.
html On the evening of May 8, Baofeng Group issued an announcement stating that Everbright Jinhui and Shanghai Jinxin filed an "equity transfer dispute" lawsuit against the company and Feng Xin, requesting the court to order the company to pay Everbright Jinhui and Shanghai Jinxin for not performing the repurchase. Partial losses of 688 million yuan caused by obligations and delayed payment interest on such losses (provisionally calculated as 63.3066 million yuan as of March 3 this year) totaled 751 million yuan.But the most angry person should be China Merchants Bank.
html On June 1, Everbright Securities issued an announcement that China Merchants Bank, a stakeholder of a priority partner in Jinxin Fund, as the plaintiff, filed a lawsuit against Everbright Capital due to disputes related to the "Balance Replenishment Letter". Everbright Capital is required to fulfill its obligation to make up the relevant balance, and the amount of the lawsuit is approximately RMB 3.489 billion.Everbright Securities stated that at present, this case is still in the filing and acceptance stage, and the impact on Everbright Capital cannot be accurately estimated. Everbright Capital is a wholly-owned subsidiary of the company and is mainly engaged in private equity investment fund business. Its operating income accounts for a very small proportion of the company's total operating income.
At present, due to related matters, Everbright Capital and its subsidiaries have discovered through self-inspection that relevant bank accounts, equity and fund shares under their names have been applied for property preservation, involving funds in relevant bank accounts of approximately 577,600 yuan; related investment costs are approximately 43.88 billion.
Tianyancha information shows that the equity list of Jinxin Fund includes a total of 14 investors, with a total scale of 5.203 billion yuan. The largest investor among LPs is China Merchants Wealth Asset Management Co., Ltd., a wholly-owned subsidiary of China Merchants Fund, a wealth management platform, with an investment of 2.8 billion yuan. China Merchants Wealth Asset Management is actually the channel party, and the investor is China Merchants Bank. The amount of this lawsuit is approximately 3.489 billion yuan, which should include principal and interest.
In this storm , all parties have suffered huge losses, and Everbright will not let Feng Xin off easily. As a relatively weak party, Feng Xin will naturally not be able to escape the relationship.
Things are still going on
Everbright Securities has held 8 people accountable
Recently, Yan Jun, chairman of Everbright Securities, attended the 2019 interim results meeting, regarding the MPS incident that has attracted much public (a 5.2 billion investment by Everbright Securities subsidiary Everbright Capital) M&A of overseas sports companies) responded.
Everbright Securities said that eight key personnel have been seriously held accountable for this lightning incident and have been given duties, disciplinary sanctions and financial penalties.
Due to the MPS incident, many senior executives of Everbright Securities left one after another. Among them is Chief Risk Officer Wang Yong. The 2018 annual report of Everbright Securities shows that Wang Yong, now 55 years old, was born in 19964html. He joined the company on August 5, 2014, one year after the "Everbright Securities Oolong Index Incident" time. Since Wang Yong joined the company, his salary has been ranked first among directors, supervisors and senior executives of Everbright Securities. In 2018, 2017, 2016 and 2015, Wang Yong's salary was 4.0863 million yuan, 4.6933 million yuan, 4.4440 million yuan and 4.6522 million yuan respectively.
According to the Securities Times, Wang Yong graduated from Xi'an Jiaotong University , 199html received a PhD in mathematics from Dalhousie University in Canada in 1994, and joined Royal Bank of Canada in the same year. Due to his excellent work, he achieved the success of being promoted to 4 levels in a row within 3 years. In 2003, Wang Yong was promoted to Vice President of Royal Bank of Canada Group and Managing Director of the Bank's Market Risk Department. He directed the formulation of the Bank's market risk management systems and processes and determined the accuracy of quantitative analysis of capital market derivatives transactions. Handle regulatory-related market capitalization, Basel implementation and risk modeling matters.
In addition, Everbright Capital President Dai Weiguo was dismissed in the first half of 2018. MPS project leader and Everbright Capital Investment Director Xiang Tong was arrested by the procuratorate on suspicion of accepting bribes. Xue Feng, the former chairman of Everbright Securities, was removed from the position of Party Committee Secretary , committee positions, etc.
In addition to the personnel "earthquake", the MPS project also brought considerable impairment provisions. On the evening of August 27, Everbright Securities announced that due to recent adjustments to the balance sheet of estimated liabilities due to the impact of the MPS incident, the company has accrued an additional provision of RMB 300 million in estimated liabilities in the first half of 2019. As of the end of June this year, a cumulative provision of estimated liabilities of 1.7 billion yuan had been made.
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