Li Jialian Capital Ushers In China'S GP

Qingju bicycle completed the financing of 1 billion US dollars, of which 150 million US dollars came from Junlian capital and Softbank fund.

A financing news in April brought people's memories back to a few years ago. A multi billion dollar financing race ended with one company merged into meituan and the other disappeared.

"When it's still in the validation phase of concepts and patterns, it really doesn't work for us. Today, let's look at it again. It is already a typical asset operation project. " Half a year later, Li Jiaqing, managing director and chief investment officer of Junlian capital, responded to the investment in Qingju bicycle for the first time.

Such an answer is in response to an interview a few years ago. At that time, the reporter asked why Moby and ofo, who shared the double-C positions of bicycles, lacked investment. Li Jiaqing said that he had doubts about the way of subsidy expansion, and whether the business model could be established still remains to be seen.

"Junlian capital is a company that knows who it is, what it can do and its positioning in the market." In October this year, Li Jiaqing of Junlian capital received an exclusive interview with the 21st century economic reporter, sharing the evolution of Junlian's investment strategy, the self requirements and boundaries of fund managers, and the thinking of equity investment market in the new decade.

Look at the boundary of assets

The project of Qingju bicycle mentioned above is the independent financing of a typical large enterprise giant's single business department.

Since 2015, Junlian capital has participated in projects with the same theme, including the operation group hatched by Baidu, Netease Youdao separated from Netease, China Eastern Airlines logistics under China Eastern Airlines, SF express under SF, and Shuhai supply chain related to Haidilao.

The splitting and restructuring projects put forward higher requirements for the capital of the fund. The single investment of the above-mentioned investment is basically 300-500 million yuan, and the investment amount of some projects reaches 1 billion yuan.

Over the past 20 years, Junlian capital team has been constantly exposed to the spin off and restructuring projects of large enterprises. From the selection of the target project, Junlian's considerations include whether the project has a core team with entrepreneurship, Junlian can bring value contribution beyond capital to the invested project, and project investment experience can be copied and inherited within the team.

Under the background of domestic circulation, RMB fund has become necessary, and science and technology investment has also stepped into the spotlight. -Made by Xu Hui

"If it's not professional, we'd rather not vote. If it's not sustainable, we try not to do it. " What Li Jiaqing wants to invest in is a founding team that is willing to make a great enterprise, and his own team can also be trained in this kind of investment, not just assets that can bring financial returns: "the core team must have a strong sense of ownership and ability, otherwise, we will not invest in any good asset. We can also talk with such a team that if an entrepreneur regards himself as the owner of the company, he will attach great importance to the value beyond money. "

The project of splitting and restructuring is one of the performance of Junlian capital team's boundary expansion. Earlier, its team has completed the expansion from it investment to multi industry sectors, and the project tentacles have expanded from China to overseas regions such as South Korea, Japan, India, etc., and managed dual currency funds, and

Investment layout should be carried out in the way of "comprehensive Fund + professional fund".

"Our boundaries are still small equity investments that focus on innovation and growth, including the non controlling role of some buyout projects, whether they are called VC, GC or PE." Li Jiaqing said that the growth of Junlian is directly related to the growth of the organization and the growth of its employees. "We will do what these accumulations are suitable for. It's not because there's a sudden heat outside, and we're going after it. "

10 billion fund manager

The strategy of Junlian capital, which gradually widens the boundary at the asset side, is restrained on the capital side.

In recent years, in addition to the larger scale of RMB funds, there are also many GP institutions involved in the master fund business. From this point of view, Junlian capital has always adhered to the boundary of minority equity investment, and the absolute core of its fund-raising is LP, an institution with long-term investment capacity.

Since the formal launch of the establishment of RMB fund in 2009, the scale of Junlian capital single fund has increased from the initial 1 billion yuan to more than 8 billion yuan. In the capital structure of LP, more than RMB 9 billion has been raised from LP funds in 2019.

The 21st century economic reporter learned that until last year's 10 billion yuan fund was in place, the number of main investors of Junlian capital RMB fund has been stable at about 20, including some national strategic funds, insurance funds and large financial institutions. Even in the severe fund-raising environment since 2018, the team has been strictly controlling the proportion of funds from third-party channels.

The ultra-high proportion of institutional LP puts forward high requirements for the standardization of Junlian capital fund management. Taking a national strategic fund as an example, it has been adhering to the principles of interest consistency, governance and transparency in the selection of GP, and has conducted systematic and long-term investigation on GP. Since 2009, the fund has become the LP of Junlian capital and has been one of the largest investors in the RMB fund of Junlian capital.

"In the long run, it is difficult to manage funds in the future as a professional." What Li Jiaqing said about professionalism includes not only the professionalism of industry knowledge and project trading, but also the professionalism of fund operation and management.

"The RMB equity investment market is relatively extensive at the early stage of development. In the next decade, higher requirements will be put forward for the specialty, scale and organization. Today's Junlian is lucky, we are ready to play in the regular heavyweight game He added that after more than 20 years of development, China's private equity industry is entering a real regular competition. As a fund manager, he should "not only make money, but also make money through value creation in a transparent, standardized and sustainable way".

Next station of PE / VC

As the market enters the new decade, the rules of the game change. Maybe it will be a global market.

Under the background of domestic circulation, RMB fund has become necessary, and science and technology investment has also stepped into the spotlight. At the same time, the market requires that firms not only continue to generate significant returns to LP, but also to generate returns in a standardized, transparent and sustainable manner.

"The state has realized the important role of direct financing in the capital market in economic transformation and upgrading. In the past, to some extent, it was only used as a financial tool, but now it is playing the role of engine and pillar." Talking about the future, Li Jiaqing said that the domestic private equity industry has entered a new watershed, and professional fund management institutions are ushering in a real golden age.

Li Jiaqing is one of the founding team members of Junlian capital. This experience also means that as a local equity investment fund manager, he has experienced the ups and downs of China's equity investment industry.

Looking back at the past 20 years, China has become the world's second largest private equity investment market, with dozens of US $10 billion super unicorns invested; now, RMB funds and US dollar funds have accounted for half of the country, and dual currency fund management has become the standard allocation of first-line fund managers; after several years of rash period, the market is gradually moving towards real specialization.

Structural changes are also taking place within the private equity industry. Some institutions have decided to embark on the road of large asset management and stick to the category of minority equity. Comprehensive funds continue to optimize the capital ratio in different sub sectors, and specialized funds with obvious industry attributes are also taking off.

"The primary market has the professional requirements of the primary market, which determines the choice of fund managers." On the road choice of Junlian capital, Li Jiaqing said that Junlian capital will continue to focus on the primary market investment, "it will not simply jump out of the comfort zone in order to jump out of the comfort zone, but constantly strengthen and iterate its core competence. Unless, you don't think it's sustainable. "

This "professional, transparent and sustainable" style is also reflected in the excellent performance of Junlian capital. It is understood that Junlian capital has maintained an average of about 10 IPOs of invested enterprises each year in the past three years, creating nearly 10 billion or more cash recovery for LP every year. There are many listed invested enterprises with market value of more than 100 billion, such as Ningde times, Yaoming Kant, bilibilibili, and single project return of more than 100 billion Kangchengyi.