One reduction is 2 billion, VC/PE earns real money on this track

On July 21 and 22, 2021, the A-share semiconductor sector continuously staged the spectacle of full-screen daily limit.

One reduction is 2 billion, VC/PE earns real money on this track

Semiconductors have become a veritable golden track.

On July 21 and 22, 2021, the A-share semiconductor sector continuously staged the spectacle of full-screen daily limit. The IoT chip design company Chipsea Technology has a 20% daily limit for two consecutive days. The photoresist leader Nanda Optoelectronics rose 9.12% on the 21st and 20% on the 22nd. The semiconductor equipment company Chipset Microelectronics rose by a daily limit on the 21st and continued to rise 14% on the 22nd. …

If you reduce the time to a little longer, in the past one or two weeks, many stocks have doubled. To use a comment from a netizen is: “Monster stocks are everywhere.”

The semiconductor companies mentioned above are all new stocks listed in the past year, which means that the VCs behind them have just caught up with this wave of market conditions. For example, in the Cambrian period that was just lifted, VC shareholders reduced their holdings by RMB 2 billion, with a return of more than 50 times. The semiconductor track also has a home run-level investment case.

At the same time, statistics show that there are still nearly a hundred semiconductor companies lining up for IPOs. Such a grand occasion is unprecedented. Semiconductors have become a veritable golden track.

Reduce holdings of cash-out chip unicorns, VC/PE earn real money

Semiconductors and chips, which were notoriously unprofitable in the past, have now become one of the most profitable tracks for Chinese VCs. The rate of return is not inferior to the past Internet tracks.

On July 22, 2021, the Cambrian, the first share of AI chips, issued a shareholder reduction announcement. The company’s shareholder Suzhou Industrial Park Paleozoic Venture Capital Enterprise (Limited Partnership) (hereinafter referred to as “Palaeozoic Venture Capital”) intends to reduce its holdings by no more than 14,151905 shares , That is, no more than 3.54% of the company’s total share capital; another shareholder Suzhou Industrial Park Zhike Shengxun Venture Capital Enterprise (Limited Partnership) (hereinafter referred to as “Zhike Shengxun”) intends to reduce its holdings by no more than 4002205 shares, that is, no more than the company 1% of total equity.

Paleozoic Ventures and Zhike Shengxun are both funds under the well-known VC Yuanhe Origin and are investors before the Cambrian IPO. According to the stock price at the close of the market on July 22, 2021, Paleozoic Venture Capital’s reduction of cash holdings can reach 1.57 billion yuan, and Zhike Shengxun’s cash out can reach 440 million yuan, and the total exit of the two funds exceeds 2 billion yuan. It is not unreasonable to use real money to explain the fiery heat of the semiconductor circuit.

Cambrian completed the IPO on the Science and Technology Innovation Board on July 20, 2020, and rose by 229% on the first day. Since then, the market value once exceeded 100 billion yuan. Although the Cambrian stock price has been cut from the high point and the market value has shrunk to more than 40 billion, the early investors of Paleozoic Venture Capital and Zhike Shengxun still have very impressive returns. Paleozoic Venture Capital is the first VC fund to invest in the Cambrian. In 2016, it obtained a 6.25% stake for a consideration of 30 million yuan, and now it has returned more than 50 times. Zhike Shengxun acquired 1.2% of the shares at a price of 187 million yuan in 2019, and the two-year return has more than doubled.

Yuanhe Origin is far more than the VCs that have made great returns on the semiconductor track. On July 12, 2021, Rockchip , the leader in multimedia chips with a market value of 60 billion, announced that the National Big Fund intends to reduce its holdings of shares it acquired before listing. The number of shares reduced will not exceed 5,184,491 shares, that is, not more than 1.3% of the company’s total shares. , A rough calculation of the amount of cash can reach around 900 million yuan. Rockchip went public in February 2020, and its stock price has soared more than 25 times since its listing. The timing of the reduction of holdings of the National Large Fund is also very precise. Although the shareholding of the National Big Fund has been lifted in February 2021, Rockchip is only about 60 yuan, and now it has risen to more than 160 yuan. The National Big Fund waited five more months and earned 500 million more.

The A-share semiconductor sector skyrocketed, which also minimized the negative impact of the reduction in share prices. In the past, the market was worried that the initial shareholders would reduce their holdings to suppress the stock price, but the current situation is that the more they reduce their holdings, the more they rise. The Cambrian rose by 3.22% on July 22, and Rockchip continued its daily limit on July 21 and July 22, completely disregarding the reduction of national funds.

Hundreds of semiconductor companies line up for IPO

Since the launch of the Science and Technology Innovation Board, a large number of domestic semiconductor industry chain manufacturers have successively attacked A-share IPOs, starting a wave of listing enthusiasm. As of the end of June, there were 302 companies listed on the Science and Technology Innovation Board, of which 52 were semiconductor companies, accounting for 17.22%.

But this is just the “appetizer”. Statistics from Bank of China Securities show that as of July 11, a total of 97 semiconductor companies have applied for IPO or conducted listing counseling, which means that there are currently a hundred semiconductor companies queuing for IPO in A-shares.

A person who has newly joined a power management chip company and participated in the preparations for the IPO said to that the performance of domestic semiconductor companies has generally risen to a higher level in the past one or two years, and those with a little idea want to take advantage of their good performance to make a IPO.

More importantly, in this wave of doubling up, small market-value semiconductor companies that once had a very poor holding experience have also emerged. Semiconductor companies with a market value of less than tens of billions are being eliminated. Statistics show that in the semiconductor sector of the Shanghai and Shenzhen stock markets, only 14 companies currently have a market value of less than 10 billion yuan, including two ST companies. The new stocks listed in the past two years have basically guaranteed a market value of 10 billion yuan.

At the beginning of 2021, market conditions were not good. There were a group of small-cap semiconductor companies that made the VCs behind them uncomfortable. Their stock prices did not move up, and they fell as soon as they reduced their holdings. They even experienced an upside-down valuation. Listing does not mean making money. Some investors even stated to Investment that they have already requested internally that in principle, they should not invest in projects with an expected market value of less than 10 billion yuan after listing, because it is difficult for such companies to attract institutional investors’ attention after they are listed.

Under the current market conditions, as long as the VCs that invest in the semiconductor track, their performance will not be too bad.

Investor: If you have money, you can’t invest

However, with the golden semiconductor track everywhere, the VCs are also very good.

“There is a suitable project to pull us to invest together . We are stupid and have a lot of money. It doesn’t matter if it is more expensive.” Recently, Wenhong, who works in an old VC, received a call from a friend “please”. His friend works in a certain country. Venture capital institutions are under great investment pressure.

Wenhong told that the current semiconductor circuit is not only expensive, but also difficult to put in. Many people have ammunition in their hands but can’t get it out. The project team is too strong to accept due diligence, which is now a very common phenomenon.

This kind of enthusiasm, even experienced old investors have never seen it. An investor who has been watching semiconductors for many years has just recently completed a 1 billion-level new fund, but he told China Investment Network that the market is currently at a clear high point, so he is seriously considering shrinking investment. The last fund of this institution invested in many analog chip companies, but the new fund should not invest again.

Another VC partner who is concerned about semiconductors told that in the direction of chip design, it is now too hot and too expensive, and there will not be so many companies that can eventually run out, so it is very cautious now; in chip manufacturing, equipment , Materials and other directions, but there are good opportunities.

But this does not mean that these directions are not involuted. Because of the “chip shortage” since the second half of 2020, companies in semiconductor manufacturing, packaging and testing, and equipment are all in short supply right now. An investor told China Investment Network that because of the “chip shortage” in anticipation, he made up his mind to invest in a packaging and testing plant at the end of last year, and the valuation doubled after two months.

More than one investor from RMB funds talked about the pressure from CVC and U.S. dollar funds to CVSource investment data shows that as of July 11, 2021, Huawei Hubble has invested in 38 semiconductor-related companies, including 18 design companies, 8 materials companies, 5 software companies, 3 parts companies, and 2 Equipment company, 1 testing company , 1 IDM. Xiaomi ’s Yangtze River Industry Fund is not far behind. It has invested in more than 50 semiconductor-related companies, including 40 design companies, 3 equipment companies, 3 materials companies, 2 parts companies, 1 testing company, and 1 IDM company. . Not many VCs can catch up with Huawei and Xiaomi’s frequency of shots.

Semiconductor itself is not a fast industry, but under fierce competition, VCs have to raise the rhythm. In the words of one investor, the financing stage of the project is now “a prerequisite for universality by one or two steps” compared with the stage of enterprise development.

On the one hand, hundreds of companies are queuing up for IPO, on the other hand, the powerful primary market has already been rolled up. The feast is just around the corner, and how to get on the bus becomes a problem.

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