NVC and BDO Runda Convertible Play: Saifung Goldman Sachs "can't afford to hurt"

In the last few days of 2012, NVC Lighting and BDO Runda announced at the same time that both parties had reached a substantial cross-market “rebate” program.

In the plan, Wu Changjiang sold most of NVC Lighting's equity to BDO Runda; BDO ​​Runda plus already held shares, will become the largest shareholder of NVC, Wu Changjiang will retired as The five largest shareholders; At the same time, BDO Runda directed the distribution of Wu Changjiang, followed by Wu will become the second largest shareholder of BDO Runda.

In addition, Wu Changjiang also gives BDO Runda an irrevocable preferential right of transfer. BDO Runda has the right to buy the remaining stake in NVC Lighting at an agreed price at any time in the future.

In a moment, the industry was uproared. Wu Changjiang, PK (the founding partner of Saifon Asia), who lasted for half a year last year, Wu Changjiang showed strong edge to the outside investment institutions such as Saifu Asia. One PE person said that he would not believe Wu Changjiang. Will be so refreshing to leave NVC lighting, "I'm sure Wu is just trying to get away Yan Yan and Schneider. Isn't he the best at retreating?"

Xu Fengyun, former vice president who just left from NVC Lighting, denied this speculation: “Wu is always in the LED layout for NVC. NVC is relatively slow in LED development, the situation is very grim. Wu is purely to put the LED on Downstream all open."

In any case, according to BDO Runda's official reply, Wu Changjiang will continue to steer NVC Lighting, and may enter the BDO Runda board of directors.

BDO Runda "Counterattack" NVC Lighting

The connection between Wu Changjiang and BDO Runda was first documented. In November 2012, BDO Runda signed an agreement with a Canadian company controlled by Wu Changjiang. Within three years, BDO Runda provided the company with LED lighting. Products and services, the latter promised to purchase more than 25 million US dollars of LED lighting products from BDO Runda each year.

Subsequently, a series of actions was dazzled by both parties: From December 11 to 21, 2012, BDO Runda quickly bought approximately 260 million NVC Lighting in the open market at a total price of approximately HK$700 million, quickly holding NVC. Lighting 8.24% stake.

On December 27th, NVC Lighting and BDO Runda both announced that Wu Changjiang plans to transfer 373 million NVC Lighting shares or 11.81% of shares in the company to BDO Runda at HK$2.55 each, for a total of 950 million yuan. Hong Kong dollar. At the same time, BDO Runda is equivalent to an option: At any time, the unit price of HK$2.95 per share bought the remaining 6.79% of NVC Lighting's remaining shares in Wu Changjiang, totaling HK$633 million.

BDO Runda will issue additional shares to major shareholders Wuhu Dehao Investment (wholly known as “Wuhu Dehao Investment Co., Ltd.”) and Wu Changjiang. They will subscribe 100 million shares and 130 million shares, respectively, at a price of 5.86 yuan per share. If successful, the Wuhu Dehao Investment and Wuchang Changjiang held Bundes Runda's shares of 24.73% and 9.3%, respectively, ranking first and second largest shareholders.

In other words, Wu Changjiang will invest 762 million yuan, approximately equal to the cash he obtained from selling 11.81% of NVC Lighting's equity - equivalent to Wu Changjiang's 11.81% stake in NVC lighting, replacing DHL Runda 9.3%. Equity, at the same time to give up Nashi Lighting's status as a major shareholder, and then offer an indefinite option.

And Wang Donglei, the actual controller of BDO Runda, actually paid cash of 700 million Hong Kong dollars and 586 million yuan, or less than 1.2 billion yuan, becoming the largest shareholder of NVC Lighting, and thus obtained a very scarce resource in the LED field - NVC Lighting has channels.

A VC fund partner analyzed: “The LED products will eventually have to be sold in the terminal, leaving the price aside, mergers and acquisitions of downstream channels, are good choices for companies that make LED chips and products. But I personally feel that For NVC Lighting, this conversion is not a good choice.He will continue to do brand, channel, lighting project, lighting project is enough, what lights do not have to sell from here?LED production capacity is serious When it comes to surplus, why not add some more production capacity? NVC lighting does not need to be laid out in the upper reaches of the LED industry. Ultimately, LED products sold in its channels will have lower production costs than its own production costs. This is the case with excess capacity.

The aforementioned PE personage also pointed out: "In terms of transaction prices, it is also worthwhile for BDO Runda. Now NVC Lighting's P/E ratio is only about 10 times; BDO ​​Runda does not count government subsidies and its P/E ratio is more than 40 times. But Wu Changjiang will not Doing the losing trade, maybe he did it, that is, he did not hesitate to squeeze out Sai Fu and Schneider. The most passive thing now is that Wu Changjiang has gone out.

After BDO Runda is selected, it will definitely change NVC Lighting's current board structure. During the long internal battle between Wu Changjiang and the investment agencies, many board members resigned, including Xu Mingyin, who was sent directly to the board of directors by Goldman Sachs. By the end of August last year, the number of NVC Lighting's board of directors fell to five. At that time, he asked if he would allow Wu Changjiang to return to NVC Lighting's board of directors. He stated that at present, the number of directors of NVC Lighting has not reached a quorum, and the number of directors will not be able to vote on whether Wu Changjiang will return.

At the beginning of September last year, Wu Changjiang returned to NVC Lighting as the person in charge of the “Temporary Operations Committee”, which was equivalent to the NVC Lighting presidency. In November last year, NVC Lighting made up two independent directors and the number of directors rose to seven. However, non-independent directors have always "maintained the original verdict." Wu Changjiang has been outside the board of directors. There are four non-independent directors, namely Yi, Lin Heping, Zhu Hai, Mu Yu, Yan Heping, the representative of SAIF Asia, Zhu Hai, the representative of Schneider, and all three are non-executive directors; Mu Yu, who is an executive director, is a representative of NVC Lighting's management team. He is considered to be Wu Changjiang's "Department."

Wu Changjiang chose to exchange shares with BDO Runda. Whether he has been blocked outside the board of directors is not known.

Wu Changjiang and Wang Donglei’s share swap show: Saifu Goldman Sachs and others “injured”?

“Mr. Wu Changjiang is the founding shareholder and former chairman of NVC Lighting. We support Mr. Wu Changjiang’s return to NVC Lighting's board of directors and management, which is based on the needs of NVC Lighting's operation and development. From the benefit of BDO Runda From the perspective of NVC Lighting's cooperation and common development, I think Mr. Wu Changjiang may participate in the management of BDO Runda and even enter the company's board of directors."

On the first working day in 2013, Bingdi Runda, the director of the company, said. Subsequently, he described the vision of the cooperation between BDO Runda and NVC Lighting:

“We believe that China’s LED lighting market is starting up. BDO Runda is leading the operation of NVC Lighting and fully utilizes the LED chip, package and lighting production capabilities of BDO Runda, and we will “Make in BDO Runda + NVC brand LED products are spread over the entire lighting market, BDO Runda will eventually become the de facto standard for LED industry by occupying the market share.The LED industry will also move from now to large companies. Order competition or monopoly."

This statement of Deng Fei is quite consistent with Xu Fengyun's argument. However, will this vision be successfully implemented or "looks beautiful?"

A private equity fund person who has been paying close attention to the LED industry pointed out: "Biggest Runda's major shareholder knows the rules of the game in the capital market. He only ventured into the LED industry in 2009, knowing how to use the least amount of own funds to stimulate large funds to develop. The new business also knows how to tie up with the speculators in the secondary market to issue an announcement that will push the stock price higher."

In the first half of 2010 and the first half of 2012, BDO Runda completed two private placements. The two rounds of financing were all more than 1.5 billion yuan. The main investment was in the LED sector. In 2010, the target of targeted distribution was mainly For the Wuhu Municipal Government investment platform, local state-funded venture capital companies. In 2010 and 2011, BDO Runda bought a MOCVD equipment (an important production equipment in the LED industry chain) and received a subsidy of 8 million to 10 million from the local government of Wuhu. The annual report shows that it received government subsidies of 277 million yuan and 310 million yuan in 2010 and 2011, while its operating profit for the same period was 5 million yuan and 146 million yuan.

The private equity fund mentioned above added: “The external support provided by BDO Runda may not stop there. Sanan Optoelectronics and its model are very close. I noticed that Sanan Optoelectronics had two local customers in Anhui Province two years ago. The government; BDO ​​Runda LED business accounted for less than one-third of the revenue, it is not out, but I guess it will get the support of the local government.

The above private equity fund analysis, BDO Runda before the LED's layout, at the moment has not yet achieved results, everything is just the capital market looks beautiful. "His major shareholders are proficient in the operation of capital and industry, and Wu Changjiang is not happy. After the honeymoon period expires, it is estimated that there will be a fight."

An LED company executive calculated the account for Tyder Runda and NVC Lighting: "Philips sales in the LED field accounted for 15% of its total sales. NVC has always been a tradition before The sales of lighting fixtures are good.Its sales in 2011 were 590 million US dollars, more than 3.6 billion yuan, I think it is 30% higher than the proportion of Philips, that year sales in the LED field is 1.1 billion.LED lighting The production cost of the product, which only accounts for 30%-40% of the chips, including packaged devices, Nara Lighting purchases up to RMB 4 billion from BDO Runda and NVC will not be able to purchase exclusively from BDO Runda. Right?"

The above-mentioned LED executives believe that NVC Lighting's contribution to BDO Runda is helpful, but its help is limited. Before BDO Runda invested too much in the middle reaches of the LED, its current operating rate is only about half of its production capacity, NVC lighting can help to digest the limited production capacity.

Perhaps, until the LED industry became hot, NVC Lighting's cooperation with BDO Runda could have a stronger synergy effect. But when will it be hot? The aforementioned industrial and financial people, or believe that at least 2014, 2015, or think, need a huge technological breakthrough, can significantly reduce the price of LED products, but at present, do not see this trend.