NVC Lighting signed a gambling agreement with Softbank Safari Goldman Sachs
NVC Lighting, a company with a traditional industry, has become a listed company in Hong Kong through 12 years of development. In the view of its founder Wu Changjiang, this is a good time and a natural thing. But the truth may not be that simple.
“I want a ticket to enter the international market. Listing in Hong Kong is a shortcut.†Wu Changjiang, Chairman, CEO and Executive Director of NVC, said in an exclusive interview with China Economic Weekly in Hangzhou: “We are listed The purpose is not to make money, we have lowered the previously issued price, we want to make NVC lighting a truly international company, listing is an important one."
On May 20, NVC Lighting (02222.HK) issued nearly 728 million shares at a price of HK$2.1 per share. It was successfully listed on the Hong Kong Stock Exchange, raising funds of nearly HK$1.53 billion and raising a net amount of approximately HK$1,373 million. Despite the dilemma of breaking the first day, company managers don't care much. In the context of the extremely low stock market in the world, why do you want to go to Hong Kong to go public, why not wait to sell a good price, this is the biggest question for the listing of NVC.
"On the gambling" listing
Wu Changjiang believes that he is a Confucian believer, using the Confucian style of management to control the NVC lighting of more than 10,000 employees. Whether it is going to Hong Kong for listing or introducing Softbank Safran, Goldman Sachs and other private equity institutions to participate in the stock market is "homeopathic", but not known to the outside world, Wu Changjiang is also a "adventurous" person.
In the "Prospectus" listed in Hong Kong, the name of the sponsor is Goldman Sachs, and the company of Goldman Sachs is also a shareholder of NVC. As of NVC Lighting, Softbank Safran and Goldman Sachs, which are private equity investors, own 30.73% and 9.39% of the shares respectively, while Softbank Saifu’s shares exceed Wuqing’s 29.33% stake, which is currently the largest shareholder.
“The reason for the introduction of Softbank Saifu was that the company did need funds for the development of the business. In the first round, we raised US$22 million. The situation of Goldman Sachs shares is different. We need Goldman Sachs to help us improve the corporate governance structure. To optimize the shareholder structure, we also need to rely on the reputation of Goldman Sachs to expand our business, especially overseas expansion." Wu Changjiang told China Economic Weekly.
In August 2006, Softbank Safran became a major shareholder with a share of US$22 million in NVC Lighting. In August 2008, Softbank Safran continued to invest $10 million through the exercise of warrants and share purchases. At the same time, Goldman Sachs invested in NVC lighting for $36.565 million.
In the two rounds of fundraising, NVC Lighting and Softbank Safran and Goldman Sachs entered into a series of pre-IPO investment plans and strategically acquired acquisitions, including the acquisition of WorldCom (and its subsidiaries) and assets such as Shanghai Akade. However, the identity of Softbank Safran and Goldman Sachs has always been a financial investor, not a strategic investor. From the perspective of pure investment return, it is their most direct idea to let NVC lighting meet the conditions as soon as possible.
According to China Economic Weekly, in the two rounds of NVC lighting financing, Softbank Safran, Goldman Sachs and Wu Changjiang set up a series of “gambling agreementsâ€, including annual performance indicators, bonuses, transfer restrictions, and priority. Purchase rights and co-sale rights, redemption rights, etc. The redemption agreement mainly includes: If NVC Lighting fails to go public before August 1, 2011, Softbank has the right to request the company (Wu Changjiang) to redeem the investment shares. Once Softbank Safford redeems, Goldman Sachs also has the right to request redemption. Go back and pay the accrued interest on the investment.
Wu Changjiang told China Economic Weekly: "In the past few years, these terms have made us feel pressure, but in the end, the annual assessment indicators have been completed, and NVC Lighting has completed its listing one year ahead of schedule to avoid starting redemption. Back to the terms."
Financing will acquire domestic LED companies
According to the "Prospectus", NVC Lighting has become China's largest manufacturer of energy-saving lamps, T4/T5 bracket manufacturers and electronic ballast manufacturers. However, although the current NVC lighting products involve three categories of lamps, light sources, lighting appliances, and the actual production and attention of the LED field is only 1%, significantly lower.
"At present, NVC Lighting will still maximize the scale and efficiency of traditional products." Wu Changjiang told China Economic Weekly, "LEDs will not be so quick and easy to replace modern energy-saving lamps, but because all countries in the world are optimistic The development of LED, the company will increase research and development in the future, especially LED investment, and will pay attention to the merger and acquisition of LED technology. NVC Lighting plans to use about 10% of the proceeds raised from the listing, that is, about 160 million Hong Kong dollars for research and development LED lighting products."
In addition to the R&D of HK$160 million for LED and other light sources, according to media reports, NVC Lighting will invest HK$490 million in domestic and international market expansion, including mergers and acquisitions and other strategic investments. And the investment network invested 410 million Hong Kong dollars, plans to build 3,000 NVC stores before the end of this year, and expand its business scope to Europe, North America and South America; in addition, it will spend 410 million Hong Kong dollars to expand NVC lighting capacity.
Wu Changjiang told China Economic Weekly: "Because the current commercialization of LEDs is still a long time, blind entry into the field may increase risks. By contrast, we are more willing to acquire domestic funds through listing. Outside LED companies, those who have helped you 'raise' the market but have not survived." However, due to the restrictions of the Hong Kong Securities Regulatory Commission, Wu Changjiang cannot disclose specific commercial merger target enterprises.
World-class companies take the initiative to acquire
As of December 31, 2009, NVC Lighting's sales revenue has achieved a compound annual growth rate of 53.3% over the past three financial years.
According to the latest report of China Lighting Association, NVC's revenue scale last year ranked second in the mainland lighting market, second only to Philips, the first for domestic lighting companies. Obtaining the listing qualification in the first market structure clearly makes Wu Changjiang ambitious. He believes that for the lighting industry, “how big is the heart, how big the stage isâ€, the key is that the quality of “director†and “actor†can keep up. on.
"Philips has entered the Chinese market for 20 years before it won the first position in the lighting field, and NVC Lighting has only achieved these results in 12 years." Wu Changjiang said frankly, "NVC lighting has reached the current stage. To make yourself feel very gratified, we are enough to make foreign competitors feel awe - respect you, and a little afraid of you."
At the end of the last century, when domestic lighting companies were still doing OEM (material processing and processing), NVC Lighting established by Wu Changjiang had begun to do ODM (incoming material design and processing), and gradually began to rely on its own brand marketing, and established Independent research and development capabilities and service systems. In the past 10 years, NVC Lighting has relied on the brand to obtain orders for the Olympic Games project, and “successfully formed†into the designated supplier of the Asian Games.
In 2007, Wu Changjiang and his partners acquired and established a joint venture UK NVC in the UK and expanded the European market through the company's channels. Wu Changjiang revealed to reporters that the company is looking for targets for investment cooperation, but he is not willing to disclose specific cooperation matters.
"Over the years, NVC lighting has been expanding at a global level." Wu Changjiang is very proud to tell China Economic Weekly. "At the height of the financial crisis, there was a world-class company that took the initiative to find us. NVC Lighting is able to acquire their lighting business." According to outside speculation, this company may be General Electric.
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