can local VC successfully launch the first shot of IPO in Hong Kong?
Buffett, the “God of stocks”, who has loved consumer stocks all his life, has a very classic saying: “life is like a snowball. The important thing is to find very wet snow and a long slope.”
By implication, investing is nothing more than: through the compounding of time (a long slope), high-quality targets (very wet snow) can realize the accumulation of wealth (rolling out a big snowball).
Over the past decade or so, the investment in China’s consumer track has been unprecedented. With the rise of new consumer goods, one brand after another has been born that we are familiar with.
In this round of boom, Tiantu investment focused on the consumption field and cast one seed after another. There are Tiantu investment figures behind brands such as China flying crane, Zhong Xuegao, Jiang Xiaobai, tea Yan Yuese, three and a half meals, Zhou Heiya, master Bao, and little red book. Many enterprises have also been listed, or are sprinting towards the capital market.
In the past, Tiantu investment was holding a whip to urge the invested enterprises to work fast. Now, it is finally their turn to try to connect with the capital market.
On June 30, Tiantu investment officially submitted a prospectus to the Hong Kong stock exchange for listing on the Hong Kong main board. Previously, Tiantu investment’s shares listed on the new third board were suspended on May 20. Before the suspension of trading, the total share capital of the company was 520million shares, with a market value of 2.599 billion yuan, at 5 yuan per share.
Once listed successfully, Tiantu investment may become China’s first local VC listed on the new third board and Hong Kong stocks at the same time.
But for investors, as a 20-year-old PE institution, how did Tiantu investment become the largest consumer investment institution in China? Impact “the first share of consumer PE”, has it found “Changpo thick snow”? If you choose to go to Hong Kong stock market at this time, can the final result be achieved?
From “large and complete” to “refined and deep”,
How the consumer investment sniper was born
The big consumption industry with a large number of bull stocks is a wide and crowded Avenue.
Food, clothing, housing and transportation, from the e-commerce platform to a small biscuit, consumers are always waiting for better and more innovative business models, products and services. Because of this, groups of entrepreneurs and investment institutions jumped into this track and staged “myths and beautiful talks” in the consumption track with their enthusiasm.
There is a paragraph in the prospectus of Tiantu Investment: “from 2019 to 2021, the number of investment projects of Tiantu in China’s consumer industry ranked third among all private equity investors, second only to Tencent investment and Sequoia China; in the same period, Tiantu ranked first among all private equity enterprises focusing on consumption”.
According to some indicators, by the end of 2021, Tiantu had invested in 205 companies (including companies that have exited), with a total asset management scale of 24.9 billion yuan, and the funds under management achieved an average internal rate of return of 28.2%, more than 35% of the portfolio company
Domestic vc/pe has long discussed the listing of venture capital companies, and listing has always been the pursuit of some venture capital institutions. However, the listing of venture capital companies affects the whole body, which requires overall careful consideration.
An insider said that there is a long way to go for A-share listing of venture capital institutions: first, private placement cannot be publicly offered; Second, the capital market should support the real economy, and financial institutions such as venture capital should not be listed.
So far, no venture capital institution has entered the A-share market through IPO. Today, Luxin venture capital, the “first share of venture capital”, is only successfully listed through backdoor in 2010.
Based on this, in 2017, Tiantu investment became the first pilot stock of investment institutions to issue innovative and entrepreneurial corporate bonds (mass entrepreneurship and entrepreneurship bonds) on the new third board, with a scale of 1.8 billion yuan. In Feng Weidong’s view, it is precisely because Tiantu “creates value through specialization” has been recognized by regulators.
Objectively speaking, as China’s first investment company focusing on consumption, the development of Tiantu investment is indeed commendable.
Take investing in Zhou Heiya as an example. As the earliest institutional investor of Zhou Heiya, Tiantu investment invested 58million yuan in Zhou Heiya, which had only dozens of stores at that time. Six years later, Zhou Heiya, which has 700 chain stores, was listed in Hong Kong, with a market value of more than 16billion yuan, and its profit was even three times that of Juewei duck neck, which has more than 7000 stores. In this project alone, the expected return of Tiantu investment is more than 1.5 billion yuan.
By the end of last year, the company had invested in 205 portfolio enterprises, 169 of which were in the consumer sector, involving food, clothing, beverages and other sub sectors. 23 companies are valued at $1billion.
Consumer racing is a rather simple industry, which has been growing in obscurity at the same time. In the view of Finance and economics Wuji, the reason why Tiantu investment can obtain the above-mentioned good investment is inseparable from the two most important factors: grasping the outlet of new consumption and Tiantu’s own methodology.
On the one hand, according to the data of insight consulting, the market size of China’s consumer industry increased from 43.8 trillion yuan in 2017 to 55.5 trillion yuan in 2021, with a compound annual growth rate of 6.1%, which is expected to reach 73.9 trillion yuan in 2026. The golden age of consumer goods investment in China has arrived;
On the other hand, with the deepening of reform and opening up, the consumption level of residents has increased significantly, and the demand for consumption upgrading is very urgent. Recently, the market size of new consumption in China has increased from 5.3 trillion yuan in 2017 to 10.6 trillion yuan in 2021, with a compound annual growth rate of 18.7%, accounting for 19.0% of the total consumer market last year.
Looking closely, whether it’s Zhou Heiya, China flying crane, Baiguoyuan, Naixue’s tea, or tea Yan Yuese, Zhong Xuegao, master Bao, etc., behind this is Tiantu’s investment logic of “improving the living standards and quality of Chinese people”.
At the same time, Tiantu also has its own
The new consumption track bears the brunt. According to the statistics of it orange, the investment amount of new consumption has continued to decline in the past five quarters. In the first quarter of this year, the total financing of new consumption was 15.27 billion yuan, a year-on-year decrease of 69%.
Under the double attack of the cold winter of capital and the cold of consumption, Tiantu investment, which has always been regarded as a consumption track investment expert, is also inevitably impacted.
On the basis of the substantial increase in investment projects last year, the total investment amount of Tiantu investment decreased slightly. The annual report shows that in 2021, the company invested in 56 projects through managed funds and its own funds, an increase of 51% over 2020; The total investment completed in the whole year was 1.629 billion yuan, a decrease of nearly 10% compared with the investment of 1.801 billion yuan in 2020.
More importantly, apart from the overall economic environment, several star consumer enterprises of Tiantu investment either have a bumpy road to listing or have a difficult life after listing. The “falsification” of their business models has led to doubts about their investment strength in the capital market.
Since this year, Baiguoyuan, which has made three attempts to make an IPO, has not only fallen into a storm of negative public opinion on the eve of its listing, but also the ceiling of the enterprise has begun to appear; Bama tea industry failed to appear on the market for many times. In May, it voluntarily withdrew its application during the listing process.
In addition, Naixue’s tea stocks, which have been listed, have fallen all the way since their listing, with a current decline of 68.5%; With the title of “China concept ESG first share”, the stock price of everything has fallen by more than 80% since its listing last year.
Tiantu investment did not want to save itself.
According to media reports, in 2021 and this year, Tiantu’s investment style has shifted a lot compared with the overall situation before.
In 2021, there were 30 large consumption investments, accounting for 71.4%; Among other investments, biomedicine, a single variety, has been invested 6 times, accounting for 14.3%; In 2022, there were 7 large consumption investments, accounting for 43.8%; Among other investments, biomedicine, a single variety, has been invested five times, accounting for 31.3%.
Tiantu’s investment since 2021, source: tianyancha
The problem is that at the “Zunyi Meeting” of Tiantu investment, Feng Weidong, the chief investment officer, once proposed to give up the pure technology field strategically and focus on consumer goods investment. The self-awareness of this decision is based on the fact that most team members are from financial or consulting backgrounds, and technology is not their strong point.
“This is an important turning point. Because we can only do consumption, our ability to see projects must be improved, which also forces us to find a threshold in this industry that seems to have a low threshold.”
Now it seems that when the whole consumer industry is cold, it will not only test Tiantu investment’s malicious vision for consumer enterprises, but also the transformation of investment style is a huge test for the investment team for the “second growth curve”.
In the short term, the current listing is
The driving force behind the upgrading of Chinese eating and drinking is still a breath away from the IPO