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Titanium Media learned that recently, Yulin Coal Fund, as the fund manager, jointly invested with Yulin Energy Group and Yulin Financial Investment to establish Yulin Emerging Industry Investment Fund, with a fund size of 1 billion yuan (paid-in 1 billion yuan). It focuses on investing in new materials, new energy, fine chemicals, aerospace, equipment manufacturing, digital economy and other strategic emerging industries, and focuses on supporting projects related to filling industry gaps, promoting industrial transformation and promoting industrial upgrading in Yulin.
Yulin Emerging Industry Investment Fund is Yulin’s first main fund to support the development of emerging industries. Focusing on the transformation and development of energy cities, it takes industries as the foundation, talents as the source, and funds as the link. It cultivates emerging industries through “capital investment promotion” and helps Yulin’s high-quality economic development.
State-owned assets VC oftenThe task is to balance investment and business attraction.Generally speaking, “fund investment promotion” is the most mainstream approach for local governments to attract investment and introduce industries. After practicing this model for a period of time, many local governments have found that this approach is inefficient and ineffective. Especially for places with limited industrial resources and where venture capital institutions have difficulty finding good projects to invest in, there is a greater demand for state-owned assets to invest directly.
Yulin Coal Fund was established in March 2018. It is a state-owned equity investment platform in Yulin City, Shaanxi Province. It was jointly initiated by Yulin Financial Investment, Yulin Energy Group, Shaanxi Coal Group, Shaanxi Investment Group and other industrial platforms. It has branches in Shenzhen and Xi’an, with a management scale of over 6 billion. After 5 years of exploration, combined with Yulin’s industrial advantages, Yulin Coal Fund has explored a unique approach that suits itself, namely “Pre-investment promotion”, and it has achieved results.
Qin Sheng, general manager of Yulin Coal Fund, said: “Currently, more than 70% of the invested enterprises have actually landed.” The investment timing is “front-loaded” and the “five strong standards” are creatively proposed for project screening, namely strong industrial relevance, strong energy demand, strong production load, strong willingness to expand production and strong financial support, in order to ensure the expected landing of the invested projects.
For example, Fengguang New Materials. In May 2020, Yulin Coal Fund increased its capital by 50 million yuan. In 2018, the company established a holding subsidiary, Aicolet, in Yulin to deeply develop polyolefin additives related industries. However, since its establishment, it has not officially carried out actual business activities until the Yulin Fund “entered the market” and the project was completed in January 2023.
Currently, Ecolet has obtained the approval for trial production from the Yulin Municipal Government. The alkylphenol unit, triethylaluminum unit and olefin catalyst unit have been in normal production. Just this month, the company’s new product triethylaluminum won the bid for the triethylaluminum framework agreement procurement of Ningxia Coal Industry Olefins Branch 1 and 2 with a bid of 14.73 million yuan.
For example, Sanjin Technology, which was invested in 2020, established a wholly-owned subsidiary, Beichen Shenyuan New Materials, in Yulin at the end of 2020, and plans to invest 360 million yuan to build an annual production capacity of 10,000 tons of polyimide monomers, polymers and intermediates. The latter is expected to pay 40 million yuan in taxes annually and create about 80 jobs. The official website of the Provincial Development and Reform Commission shows that the energy-saving report of the project has been approved in principle.
In addition, projects such as Wujiang Chemical and Sino-German Transportation have successively completed the closed-loop operation of “Pre-investment promotion” and settled in Yulin under the “guidance” of Yulin Coal Fund.
“The demand for local projects is that the project must have relationships with local enterprises and upstream and downstream of the industrial chain, but market-oriented investment institutions may not be familiar with the local industrial situation, the local investment promotion process and details, and the relevant government departments involved. Therefore, for them, the challenge of attracting investment for local areas is very great. “Enterprise investment promotion is a systematic project. Only by deeply cultivating the local area for a long time and maintaining local resources can this be done more efficiently. Therefore, many places choose to do it themselves.” Qin Sheng said.
State-owned assets have higher requirements for fund security than for investment returns, which is exactly in line with local investment promotion. The first priority is investment promotion, followed by fund security, and finally obtaining higher investment returns.
The difference between local investment promotion and sub-fund investment promotion is that there is no situation where no relocation and no payment are made. Qin Sheng said, “We have to take into account the progress of investment promotion and fund investment. Some companies, especially chemical projects, have a long development cycle and need 1 to 2 years to develop locally. However, we also need to invest in the project first based on factors such as the relevance of the company to the local industry, matching of resource needs, and the founder’s intention to expand production.”
In the context of economic downturn, it is increasingly difficult for private venture capital institutions to raise funds, and a large number of talents have begun to shift from market-oriented institutions to state-owned institutions, which has also provided investment talent accumulation for state-owned institutions. At the same time, after years of development, local guidance funds have their own relatively complete system for investment judgment, and they know better how to coordinate local industries and upstream and downstream resources.(This article was first published on Titanium Media APP, author: Guo Hongyun, editor: Tao Tianyu)
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