Shengdao Investment: From Holding Jiangzhong Dietotherapy To Chiyuan Yiguosheng

Take control of a company, and then continuously improve the value of the company through restructuring, integration, improvement and other ways - this investment method is called holding investment, which belongs to the high-level method in the field of private equity investment.

Due to the higher requirements on the resource integration ability and post investment operation capacity of institutions, there are few investment institutions that are good at holding investment in the domestic market. However, Shengdao investment takes holding investment as its foothold. In the fierce competition of private equity investment market, it explores a new path to break the GP differentiation.

Since the end of 2017, it has controlled Jiangzhong dietotherapy and helped it to turn losses into profits after more than two years of transformation. By 2020, the company will lend a helping hand in the crisis of Yiguo fresh food and spend hundreds of millions of yuan to help the company go bankrupt and restructure. This new investment institution is gradually emerging in the industry.

What kind of investment institution will Shengdao become in the future? When the outside world compares it with foreign KKR, 3G capital and other institutions that are good at holding investment, Xue yunning, CEO of Shengdao investment, frankly told the 21st century economic report that although Shengdao and them are similar in operation, their ultimate goal is essentially different.

"Their ultimate goal is to earn high returns for the fund, while Shengdao is to" take advantage of the financial situation and become the real enterprise. ". Fund returns are on one hand, but our ultimate goal is to become a large industrial holding group dominated by consumption. " He said.

Controlling Jiangzhong dietotherapy -- fine operation to turn loss into profit

Founded in 2016, Shengdao investment is the private equity fund management platform of Wuhan contemporary group. At present, Shengdao manages more than 10 funds, with an accumulated management scale of more than 5 billion yuan.

In the first two years of development, Shengdao's capital mainly comes from its parent company, contemporary group. Its investment strategy is similar to most VC companies in the market. It mainly makes minority equity investment, and its projects cover sports, consumption, education, science and technology. Around 2018, Shengdao began to try to raise funds from abroad. At that time, the equity investment industry was in the cold winter of fund-raising because of the new regulations on asset management and deleveraging. In order to reflect the alienation of business trip in the market-oriented competition, Shengdao transformation established the development mode of holding investment transaction as the main part and equity investment transaction as the auxiliary.

Under this strategy, Shengdao has now taken control of Jiangzhong dietotherapy, Yiguo fresh food, and regular game companies, and has invested in Beijing No.4 Middle School online school, blue whale media, runaway comics, Aidong fitness, etc. Among the funds managed by Shengdao, about one-third of the funds come from contemporary groups, government guided funds and social capital.

Jiangzhong dietotherapy is the first investment case after the transformation of Shengdao. After two years of Shengdao holding, Jiangzhong dietotherapy has turned losses into profits, and is expected to land in the capital market in the next two years.

"Many things are simple to say, but it is not easy to implement them. You have to step by step to make up the weaknesses and carry forward the long board, which tests the fine operation ability of the team. " Talking about the transformation process of Jiangzhong dietotherapy, Xue yunning concluded.

It is understood that Jiangzhong dietotherapy was first established in 2011, and its products such as Jiangzhong Hougu rice and Jiangzhong Hougu biscuit are well known. From 2015 to 2017, the company was in a state of loss and debt due to the problems of its marketing strategy and channel mechanism failing to keep pace with the rapid changes in the consumer industry.

As a result, Jiangzhong decided to introduce an external investor, contemporary group, and Shengdao team immediately started to follow up the project. "We are optimistic about the company's advantages in brand and product, and believe that we can turn the disadvantage around, turn the company into a profitable enterprise, and finally go public, and its debt problem can be solved." Xue said.

In December 2017, Shengdao completed the holding of Jiangzhong dietotherapy. Since then, Shengdao has sent more than ten people to participate in the post investment work, carrying out radical transformation in marketing strategy, talent introduction and other aspects of the enterprise.

For example, in terms of advertising, the research team of Shengdao believes that the consumer goods industry has passed the era of hard broadcasting of big TV media, and people's consumption habits have also changed with the fragmented development of media information access. As a result, the team replaced the existing advertising TV strategy with marketing resource replacement, new media operation, online red belt goods, variety show title, etc., which reduced the original huge advertising expenses by 70% on the basis of almost no impact on the promotion effect.

In terms of personnel, Shengdao team has introduced a group of senior executives from Renfu pharmaceutical, Nestle, Danone, Huiyuan Juice and other companies under the condition of ensuring the basic stability of the original management, so as to help Jiangzhong further improve the operation efficiency in production, channel, brand and company strategy. After a series of operations, Jiangzhong dietotherapy went from loss to profit.

The business imagination of transforming from C end to B end

The holding investment in Jiangzhong dietotherapy three years ago helped Shengdao set a benchmark in the industry. In 2020, we will rush to help Yiguo fresh, which once again reflects Shengdao's courage and courage. Xue said that in 2020, bankruptcy reorganization cases occurred frequently, and yiguoshengxian was one of the most valuable typical enterprises. Subject to the strategic adjustment of the original shareholders, it is in debt predicament, but its business development is not too big a problem. If it can get on the right track after bankruptcy reorganization, the company will go to "new life".

E-fruit fresh food, which was established in 2005, originally focused on C-end fresh food business. Since 2013, e-fruit fresh food has successively obtained investment support from Alibaba and KKR. Alibaba is not only its major shareholder, but also an important business partner of easy fruit fresh. Ali once handed over the exclusive operation right of tmall fresh area to Yiguo fresh food operation.

Thanks to Alibaba's capital and business support, ecofresh achieved 10 billion Gmv in 2017, far ahead of the second place in the market at that time. However, it is worth noting that in the market environment at that time, the model of burning money subsidies in exchange for market share was quite popular. Yiguo fresh fruits, which have been expanding their market share, are also facing losses brought about by subsidies.

At the end of 2018, Alibaba's organizational structure was adjusted and the operation of tmall Chaosheng, which was previously in charge of Yiguo Shengxian, was transferred to HEMA Xiansheng. In this context, e-fruit fresh C-end business volume has a cliff like decline. At the same time, the withdrawal of Alibaba's business also triggered a chain effect, leading to a run on Yiguo fresh cooperators and upstream and downstream related parties. Finally, the company went bankrupt and restructured due to debt problems.

At the end of 2016, Shengdao, which participated in the C + round investment of e-fruit fresh, changed from a small shareholder of e-fruit fresh to the only investor in the bankruptcy reorganization case. Xue yunning said that the choice of continuous support for e-fruit fresh food, on the one hand, is due to the recognition of the founding team; on the other hand, it is also important for the development potential of b-end business after the company's transformation.

"Zhang Ye, CEO of Yiguo fresh food, is a very excellent entrepreneur. He has responsibility, ability, pattern and personality charm. The team he leads has strong cohesion and business development potential. " Xue said.

In the end of cooperation between Alibaba and e-fruit fresh, although the company is facing debt problems and can not even pay wages, under the leadership of Zhang Ye, the senior management team remains stable. In the company's most difficult time, the core team even raised tens of millions of yuan to supplement the company's cash flow.

Yiguo team maintains strong resilience in the face of difficulties. For example, with the support of Ali, e-fruit fresh food ranked first in the fresh food industry in 2017, and arranged b-end cold chain and supply chain business. After that, even if Alibaba withdrew, Yiguo gradually transformed into a 2B company in the upstream of the industrial chain in three years, and the b-end business has maintained high growth.

Xue yunning disclosed that in the past few years, the growth rate of the b-end business of Yiguo Shengxian was faster than expected. In 2017, the b-end income of Yiguo fresh food was only tens of millions of yuan, and it has reached 1 billion yuan in 2018. In the first eight months of 2019, the company's b-end revenue has reached about 2.6 billion yuan.

"Yiguo fresh food is no longer a traditional fresh e-commerce enterprise. It is now a fresh food supply chain enterprise." Xue said. At present, e-fruit fresh C-end business in the form of no money to continue to operate. At the same time, the company's b-end supply chain and cold chain logistics business has also achieved profits, which will be the main source of revenue of the company in the future.

Financial achievement industry: the future of Industry Holding Group

From Jiangzhong dietotherapy to fresh fruit, Shengdao gradually established its reputation in the industry. Even some projects in the market are actively looking for, hoping that Shengdao can carry out holding investment. But Xue said frankly, at present, Shengdao has already invested in Jiangzhong dietotherapy, Yiguo Shengxian and a game company. Shengdao will not make new holding investment until the three enterprises have achieved a certain scale, volume and profit.

The underlying reasons also reflect the fundamental difference between minority equity transactions and holding transactions. When making minority equity investment, it is necessary to select the enterprises with the best performance and reasonable valuation in the industry, and then invest them as small shareholders, without taking up too much energy. GP can usually find projects according to their own rhythm and control the investment progress.

But when making holding investment, the target of investment is the enterprise with obvious advantages and disadvantages. Because the enterprise has advantages, it has the opportunity of controlling investment. For investment institutions, only when they have the ability and resources to help enterprises change their disadvantages and develop their advantages can they really have the value of holding investment.

Therefore, the appropriate holding investment projects are often not available, and it is almost impossible to invest according to a certain progress every year. On the other hand, after holding a project, it needs a lot of energy to manage and operate. This kind of investment is not won by quantity.

What kind of investment institution will Shengdao become in the future? When the outside world compares it with foreign KKR, 3G capital and other institutions that are skilled in holding investment, Xue said that the biggest difference between Shengdao and them is that their ultimate goal is to earn high returns for the fund. Shengdao is "taking advantage of the financial situation to become the real industry". Fund return is one aspect. However, the ultimate goal of the team is to become a large-scale industrial holding group focusing on consumption after holding several companies.

Xue yunning said that for Sheng Dao fund's LP, it may choose to withdraw after the fund matures. Shengdao team will continue to use the new fund to receive the share of the old fund, and maintain the controlling right in the project. The team chose to focus on the consumption field mainly because the consumer enterprises have positive cash flow. On this basis, enterprises do not even need external financing, can establish new industrial funds, through the acquisition of upstream and downstream projects to grow.

In addition to the above-mentioned holding investment cases, Shengdao also has a team in continuous minority equity investment. Talking about the logic of making minority equity investment, Xue yunning said that Shengdao mainly focuses on minority equity investment upstream and downstream of holding projects, and also hopes that there will be synergy between small equity projects and holding projects. Some small equity projects may eventually become Shengdao holding projects.

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