Reporter | Liu Chenguang
Recently, Shenzhen Tiantu Investment Management Co., Ltd. (hereinafter referred to as Tiantu Investment) passed the Hong Kong Stock Exchange listing hearing. Tiantu Investment is a domestic private equity investment institution focusing on consumer goods investment. As of June 30 this year, its total asset management scale reached 24.7 billion yuan.
According to the prospectus, as of June 30 this year, Tiantu Investment has invested in a total of 222 portfolio companies, including 180 companies in the consumer sector such as food and beverages, clothing, and healthcare, as well as companies in other industries (such as biotechnology and technology industries). 42 companies. The investment covers such brands as Zhou Hei Ya, China Feihe, Naixue’s Tea, Little Red Book, and Tea Yanyue Se.
Focusing on a certain field is often accompanied by certain risks. Tiantu Investment stated in the risk warning section that as a private equity investor and fund manager focusing on the consumer sector in China, the company’s business and fund performance may be significantly affected by fluctuations in the consumer industry, and such fluctuations may is cyclical and is affected by many factors, including general economic conditions, changing legal and regulatory environments, interest rates, inflation rates, consumer preferences, levels of personal disposable income, and supply and demand dynamics, many of which are beyond the Company’s control.
Tiantu Investment pointed out that in the case of economic recession, customers will become more budget conscious and more sensitive to the amount they are willing to spend on consumer goods or services. As the majority of the portfolio assets are in consumption-driven businesses in China, revenue, profitability and business performance could suffer if the Company is unable to shift its investment focus to markets other than the consumer sector if customer demand for consumer goods or services decreases or the economy experiences a sharp downturn. The outlook will be significantly affected.
Statistics show that as of June 30 this year, Tiantu Investment has completely withdrawn its investment in 30 companies, and the remaining 192 companies are still in the portfolio, of which 21 companies have partially withdrawn their investment.
According to the prospectus, from January 1, 2019 to June 30, 2022, the company invested in 115 portfolio companies, including 96 new portfolio companies and 19 existing portfolio companies. As of June 30, 2022, 158 of the existing 192 portfolio companies are in the consumer industry (including consumer goods, consumer services, and consumer channels), and the remaining 34 companies are mainly in the biotechnology or technology industry.
Judging from the current development of China’s consumer industry, consumer investment is still full of prospects. According to China Insights Consulting, despite the impact of the COVID-19 epidemic, the scale of China’s consumer industry will increase from 43.8 trillion yuan in 2017 to 55.5 trillion yuan in 2021, with a compound annual growth rate of 6.1%. It will reach 73.9 trillion yuan in 2026, with a compound annual growth rate of 5.9% from 2021 to 2026.
However, the overall performance of Tiantu Investment is relatively volatile. According to the prospectus, in 2019, 2020, 2021 and the first six months of 2022, the company will recognize revenue and income (including fund management fees, investment income and losses, and investments held by funds and direct investment attributable to associates and Joint venture performance) were 580 million yuan, 1.273 billion yuan, 907 million yuan and 187 million yuan respectively. Tiantu Capital stated that most of the company’s net investment gains or losses are based on unrealized fair value and may fluctuate from time to time.
Tiantu Capital pointed out that due to the nature of the company’s business, there are uncertainties related to investment valuation that cannot be controlled, such as changes in China’s economic and regulatory environment, fierce competition in the fund management industry, and the impact of COVID-19, and the investment Investment income may fluctuate from time to time from project to project and such fluctuations are expected to occur in the future.
From the perspective of investment income, as of January 1, 2019, December 31, 2019, December 31, 2020, December 31, 2021, and June 30, 2022, the average internal Yields are 23.3%, 16.2%, 17.8%, 28.2% and 20.5% respectively
The company’s net profit has increased significantly from 268 million yuan in 2019 to 1.058 billion yuan in 2020, but will further drop to 720 million yuan in 2021. In the first six months of 2022, the company’s net profit fell slightly to 394 million yuan, compared with 519 million yuan in the same period in 2021.
Tiantu Investment pointed out that the fluctuation of net profit mainly reflects the valuation changes of the company’s investment portfolio companies. 2020 is a bumper year for the capital market, with the valuations of both public and private companies (especially the consumer sector) growing rapidly. In and after 2021, the capital market and valuation levels will gradually cool down. In terms of realized gains, some of the company’s portfolio companies were successfully listed, and certain investments were successfully exited in 2020 and the first half of 2021. All relevant factors contributed to the high net profit in 2020 and the volatility thereafter.
Previously, Wang Guobei, managing partner of KPMG China’s asset management industry, analyzed to Jiemian News reporters that PE/VC listing has multiple meanings. On the one hand, listing gives shareholders of such institutions the opportunity to exit and increases the liquidity of such institutions’ shares; on the other hand, ordinary investors may not meet the requirements of qualified investors investing in private equity funds, but they can pass Investing in the stocks of such institutions indirectly participates in private equity investment.
In addition, she said that PE/VC can also use the opportunity of listing to further strengthen corporate governance and brand building, enhance investor confidence in their own asset management products, and promote their own business development; moreover, listing funds can also enrich their own capital , It is beneficial to attract talents, implement equity incentives and increase the proportion of managers to follow up with investment.
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related events
- Tiantu Capital, which invested in Zhou Heiya and Xiaohongshu, passed the Hong Kong Stock Exchange hearing2022-12-08
- Tiantu Capital sprints for IPO, with a valuation of over 10 billion2022-05-24
- Tiantu Investment successfully raised the first US dollar VC fund, with Nestlé as the cornerstone investor2020-08-03
- “Halogen A” stewed fried chicken feet received nearly 100 million yuan in round A financing, Tiantu exclusive investment2018-03-26
- Laoyuegou completed nearly 200 million RMB in round C financing led by Tiantu Capital2018-02-26
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