Source | Toutiao.com (public account ID: China-Venture)
Author | Lin Ju
"Everbright Capital Breaking Thunder" incident has new developments one year after: two of them have paid LP of 550 million yuan.
On May 12, Everbright Securities announced that its subsidiary Everbright Jinhui will pay Shanghai Huarui Bank investment principal of 400 million yuan and corresponding expected returns, lawyer fees, arbitration fees and other related fees.
Previously, on May 3, Everbright Jinhui, as one of the respondents to the ruling, was asked to pay Shenzhen Hengxiang's investment principal of 150 million yuan and corresponding expected returns, lawyer's fees, arbitration fees and other related fees.
In addition to the litigation disputes on this appeal, there are at least two other cases - China Merchants Bank and Jiaxing Zhaoyuan Yongjin Equity Investment Fund - a compensation arbitration dispute of at least 3.5 billion yuan, and the results have not been announced yet.
"Everbright Capital Thunder" originated from a failed cross-border merger and acquisition case.
In June 2016, the "Shanghai Jinxin Investment Fund (hereinafter referred to as "Jinxin Fund") jointly initiated by Storm Group wholly-owned subsidiary Storm Group and Everbright Jinhui acquired 65% of the equity acquisition of MP&Silva (hereinafter referred to as "MPS") in the sports event management company.
According to the fund agreement at that time, after acquiring MPS, if no accidents were made, Storm Group would install MPS into the listed company system within 18 months. Through this move, the investor will be able to withdraw successfully.
But things went against my expectations. Storm's market value continued to fall - from more than 40 billion to 1.7 billion yuan (market value in mid-2019), MPS company went bankrupt, and everything "collapsed".
Since May 2019, relevant parties in Everbright have successively received losses lawsuits from shareholders of Jinxin Fund.
According to the announcement of Storm Group at that time, the shareholder list of Jinxin Fund included 14 investors, with a total investment scale of 5.203 billion yuan.
It is not yet known that the total amount of compensation that relevant parties involved in Everbright will be compensated, but Everbright Securities said it will urge Everbright Jinhui to perform its corresponding duties. At the same time, in the 2019 annual report, Everbright Jinhui and Jinxin Fund also sued Storm Group and its founder Feng Xin on the grounds of equity repurchase contract disputes, demanding compensation of 750 million yuan.
but everything seems to be fruitless. Storm Group, which currently has a market value of only 500 million yuan, may face the risk of delisting. After Feng Xin was rumored to have been taken away for suspected crime last year, there has been no news yet. Does Everbright Securities have to bear all the consequences alone?
Everbright guarantee? In 2019, it set aside 3 billion liabilities due to the "burst" of MPS
Everbright Jinhui Investment Management (Shanghai) Co., Ltd. (i.e. "Everbright Jinhui"), which is a subsidiary of Everbright Capital, a wholly-owned subsidiary of Everbright Securities, engaged in fund management.
The aforementioned lawsuits were all caused by the risk of the investment project of Shanghai Jinxin Fund, where Everbright Jinhui served as the executive partner, and failed to withdraw as planned.
Shanghai Jinxin Investment Fund is a merger and acquisition fund jointly initiated by Storm Investment, a subsidiary of Storm Group, and Everbright Capital, a subsidiary of Everbright Securities.
In May 2016, Shanghai Jinxin Investment Fund announced the acquisition of 65% of MPS shares. According to the announcement of Storm Group at that time, the shareholder list of Jinxin Fund included 14 investors, with a total investment scale of 5.203 billion yuan.
Among them, the one with the most investment was China Merchants Wealth Asset Management (the actual entity after penetration was China Merchants Bank), with an investment of 2.8 billion yuan. The second is Jiaxing Zhaoyuan Yongjin Equity Investment Fund Partnership (LP), which invested 600 million yuan; other investors also include Shanghai Aijian Trust, Everbright Capital, Shenzhen Kehua Capital and other companies.
Everbright Capital subsidiary, Storm Investment and Shanghai Qunchang Financial Services each invested 1 million yuan as GP.
The Economic Observer once reported that in the agreement of Shanghai Jinxin Investment Fund, the investment amount of priority investors was 3.2 billion yuan, including 2.8 billion yuan of investment from China Merchants Wealth Asset Management and its affiliates; while Everbright Capital and Storm Investment invested 60 million yuan and 200 million yuan as LP respectively, both of which were inferior investments. The remaining intermediate LPs are expected to have a yearly fixed investment income of 15% of the project investment amount.
means that after the "burst", Everbright Capital will continue to give investors 15% of fixed income each year.
According to the announcement of Everbright Securities, there are 5 lawsuits related to Everbright Jinhui, specifically:
1. In July 2019, Shanghai Huarui Bank filed a lawsuit against Everbright Capital on the grounds of other contract disputes, and filed arbitration against Everbright Jinhui on the grounds of supplementary agreement dispute arbitration;
2, 2019 Dairy Cow in June, Shenzhen Hengxiang filed arbitration against Everbright Jinhui, Storm (Tianjin) Investment Management Co., Ltd., and Shanghai Qunchang Financial Services Co., Ltd. on the grounds of private equity investment contract disputes;
0 3. Jiaxing Zhaoyuan Yongjin Equity Investment Fund filed arbitration against Everbright Jinhui on the grounds of a private equity investment contract dispute;
4. In June 2019, China Merchants Bank filed a lawsuit against Everbright Capital due to disputes related to the "Difference Compensation Letter", with the amount of litigation of 3.489 billion yuan;
5. In May 2019, Everbright Jinhui and Jinxin Fund wanted the Beijing Higher People's Court to file a civil lawsuit on the grounds of a equity repurchase contract dispute, demanding Storm Group Co., Ltd. and Feng Xin to compensate for some losses caused by failure to perform their obligations, totaling 750 million yuan.
Among them, the arbitration dispute between Shanghai Huarui Bank and Shenzhen Hengxiang has already been concluded, with a total compensation of 550 million yuan. The lawsuit between Jiaxing Zhaoyuan Yongjin Equity Investment Fund and China Merchants Bank has not yet been achieved.
It is worth mentioning that an analyst who did not want to be named told Toutong.com that financial institutions rarely issue "Difference Compensation Letter", and even financial products sold by banks will not promise rigid redemption. It can be seen that in order to gain the trust of China Merchants Bank, Everbright Capital "took all its efforts". Unfortunately, the betting project was gone.
As for the 750 million yuan claimed by relevant parties in Everbright for suing Storm Group and Feng Xin, judging from the current situation, it seems that it is a waste of money.
auditing agency due to lack of CFO and no intention to cooperate, Storm Group has not disclosed its 2019 annual report so far. The end of April is the deadline for the 2019 financial report of listed companies. According to the Shenzhen Stock Exchange where Storm is located, the annual financial report has not been disclosed within two months from the expiration of the statutory disclosure period, and the exchange may suspend the listing of the company's stock.
, and Feng Xin was forced to take compulsory measures by the public security organs for suspected crimes in 2019, and has not been heard from him yet. In April this year, the Shenzhen Stock Exchange also criticized Feng Xin because it was unable to contact him.
Screenshot Source: Shenzhen Stock Exchange Announcement
Everbright Securities seems to have also expected this result. In its 2019 annual report, Everbright Securities stated that due to the impact of the MPS project, it once again set aside 1.611 billion yuan in liabilities. As of the end of 2019, Everbright Securities recognized a total of 3.011 billion yuan in estimated liabilities.
A cross-border acquisition of capital bureau: Who is greedy and who is afraid of
Back to the acquisition case of MPS at that time, there are indeed many doubts about this project. An analyst from an investment institution who did not want to be named pointed out to Toutiao.com that looking back at the acquisition case seemed a bit too hasty.
In September 2015, MPS sought private equity investors internationally with a target of US$700 million. After Jinxin Fund acquired 65% of its shares, it pushed its valuation to US$1.4 billion (about RMB 9.638 billion). In this acquisition, UBS served as the FA of MPS, while Yijie and CICC were the FA of Everbright and Storm.
Among them, Yijie is doing cross-border mergers and acquisitions. The company's CEO Feng Lin once said that it only took 6 months from the start to the formal completion of the MPS acquisition case. "The six and a half months of merger and acquisition cycle progresses relatively quickly, and now there are rarely projects completed in a few months," said Chen Wenlong, a lawyer at Shanghai Huarong Law Firm.
According to the fund agreement at that time, after acquiring MPS in May 2016, if there is no accident, Storm Group will install it into the listed company system within 18 months. Through this move, the investor will be able to withdraw successfully.
If MPS is injected into Storm Group, it may bring significant benefits to the company. In 2015, Storm Technology was listed on the ChiNext, and achieved 36 daily limit increases in 40 days, with a market value exceeding 40 billion yuan. But the stock price continued to fall after that, perhaps in order to push up the stock price, Storm began to look for new opportunities. At that time, driven by the State Council's "Document No. 46", Chinese capital was entering the sports market with a large scale.
Feng Xin also affectionately called one of the founders present "brothers" at the launch conference and made sure to predict: "MPS is a ticket for Storm to enter the sports industry."
But as Storm's market value continues to fall - from more than 40 billion to 600 million today, MPS company has long gone bankrupt.
年中国大学快年 once reported that after the acquisition of Storm in 2016, MPS began to continuously lose copyright and contracts of related sports leagues. Among them, in October 2017, MPS lost the copyright of Serie A, which was one of MPS's largest revenue sources. This loss has gradually put the company in financial difficulties. After that, MPS began to be unable to pay the copyright fees and was reported to have owed about $10 million in the Bundesliga.
In October 2018, MPS London subsidiary (formerly operating headquarters of the group), Monaco subsidiary and Dublin subsidiary entered the bankruptcy liquidation stage. Wikipedia shows that the company was cancelled in October 2018. In July last year, the official website of MPS was no longer open.
It is reported that the two main founders of MPS, Andre and Ricardo, used their industry influence and personal relationships to lock in most of MPS's sports events transactions. As the two above gradually left MPS, the company's sports copyright transactions became slow and chaotic.
From being acquired to the company entering the bankruptcy liquidation stage, the founder of MPS seems to have already "left". As early as August 2015, Andre and Ricardo had reduced their stake in MPS, from the original holding to the non-controlled one. In 2015, Andre founded Eleven Sports, a company that also operates sports events, and in 2017, Ricardo acquired Sport Business, a sports event data service company. Since then, the two have also invested in football clubs respectively.
Eleven Sports and SportBusiness are still operating and the trend is improving. In 2018, Eleven Sports bought the broadcast rights of La Liga, Serie A, Eredivisie and Chinese Super League in the UK and Ireland in 2018, and reached a broadcast service agreement with Taiwan professional baseball teams in 2019.
In March 2019, Storm, Everbright and other related companies filed a lawsuit against MPS on the charge of commercial fraud in the London High Court. Both founders of the company were involved.
An analyst from an investment institution who did not want to be named told Toutong that the sports copyright operation company is an asset light company and relies heavily on the founder's resources. Once the founder exits, it will have an impact on the entire business model. So, did Shanghai Jinxin Investment Fund conduct due diligence when it initiated the acquisition of MPS? Why was there no provisions for the non-competition of MPS core personnel during the acquisition?
"Now, looking at it, it might be a hasty transaction," the analyst said. He said that the 5.2 billion yuan fund scale is quite large. In early 2016, the fund had cast a wide net to raise investors in the industry. The investment institution where it was located also received invitations, but due to distrust of the manager, it did not participate in the event of no participation.
"As an investor, I look back and reflect, there are also misjudgments in overseas mergers and acquisitions projects, and investment institutions are prone to lose their minds when chasing the trend." The investor sighed to Tinzhong.com on the phone.
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