Jiuding Capital 2.0: Gene behind “Dark Horse”

2010-10-22

When night fell, coolness came. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

At 23:50, when the reporter finished the interview on Lei CAI in Beijing Shangri-La Hotel, the comments on Jiuding Capital, such as weirdness and vigorousness, were faded away gradually. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

After 20 minutes, Lei CAI will return back to the meeting room on the sixth floor of Winland International Finance Center at the Financial Street to attend the review meeting of a project, where other partners and project leaders have already waited in the office. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Just like other partners, whether in Xinjiang or in Hainan, Lei CAI returns back to Beijing to attend the partner meeting each week. Last year, the accumulated flights in his two airlines platinum cards were up to 239 times. Lei CAI joked that the sum of the time staying with clients and families was less than that with airline stewardesses, all the flights were morning and night ones, and the most investigation “projects” were the airports across China. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “So do other partners.” Lei CAI said. Everybody works very hard, so I never get slack at my work.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Each Saturday and Sunday, in Winland International Finance Center where it gathers the world’s top financing institutions, the record in its reception desk shows that one of the most overtime institutions is Jiuding Capital (full name: Jiuding Capital Co., Ltd.), known as “PE Dark Horse”. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

There is no star but team2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “If I get slack, I will be “fired” by Jiuding Capital.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Then, we started from this topic. Any one partner can be fired by her self-funded enterprise. It seems a joke. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “If we dare to fire ourselves, Jiuding Capital can make a real breakthrough.” Lei CAI said, “At the end of each year, Jiuding Capital holds a special partner meeting, all the partners commonly evaluate each partner’s contribution to Jiuding Capital. At that time, all the partners are awarded by their contributions, not by their shares or date working in Jiuding Capital. If an overwhelming majority of partners think that you fail to play a role as a partner, this partner must quit.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

In PE industry, the partnership system is an international practice, but is usually at the fund level. The fund manager (General Partner) runs in accordance with standard partnership system. It is not common in China. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “We have run in accordance with standard partner management mode from the start.” Such system design guarantees that each partner works for herself/himself, as well as for the Jiuding Capital, but not for several persons. “In Jiuding Capital, there is no star but team. There is no irreplaceable employee. With the help of this platform, personal potential will be doubled by other excellent co-workers. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “Moreover, Jiuding Capital is also an open platform for the partners. At first we only had several founding partners, now we have more than 10 partners. For excellent talents, we have kept an open mind.” Lei CAI said. Compared with Goldman Sachs with nearly 300 partners in the world, Jiuding Capital’s partners are too little.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

The CCTV reporter said with emotions when he talked of his experience of interviewing Jiuding Capital’s another partner - Xiaojie HUANG. Before interview, he made good preparations to know Jiuding Capital’s final decision maker, but he failed to find the answer. During interview, he asked some well-prepared questions to know the truth. I asked Xiaojie HUANG, “Was there any project that you accepted but others opposed, and which has been proved that it was successful.” Xiaojie HUANG said: “In Jiuding Capital, there is no final decision maker, it is a group decision making mechanism.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “This is why we held the partner meeting at weekend. We are young entrepreneurs. Although everyone is very excellent, none of us has enough ability and experience to judge everything. Other institutions depend on a star or a core. Our partner team’s investment experience added up to 100 years, higher than that of any star or core. We do believe in the collective intelligence. We depend on the power of teamwork.” Lei CAI said.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

The openness of Jiuding Capital’s partner platform has been proved further by several new partners, including president of the listing company, authority in the accounting circles, well-experienced risk control expert, etc.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Network interweaved by “longitude line” and “latitude line”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Besides the standard partner system, in Lei CAI’s opinion, national business network system is Jiuding Capital’s another characteristic. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Since 2010, Jiuding Capital has built nearly 30 working bodies on a national scale, and dispatched some professionals. These “dispatchers” seek Jiuding Capital’s standard target enterprises with dragnet-type search within the areas under their jurisdictions. This constitutes the “latitude line” of Jiuding Capital’s business network. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Jiuding Capital has built China’s largest professional investment teams in 5 major business fields: consumption, agriculture, pharmaceuticals, advanced manufacturing and emerging industry. They have performed project research and industrial development in their professional fields with undivided attention. This constitutes the “longitude line” of Jiuding Capital’s business network.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Interweaved by “longitude line” and “latitude line”, a nationwide business network is formed. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Some experts call it a “personnel + project matrix mode”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Moreover, Jiuding Capital has a financial audit team dominated by the above-mentioned “four kinds” of personnel. Once the “forward-deployed forces” across China had reached the cooperation intention with the target enterprise, the investment team and the financial audit team from several professional fields, just like “principal forces”, quickly follow up to perform internal and external, upstream and downstream due diligence and investment research. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Jiuding Capital’s professionalism in the project judge has won good reputation. In some projects, we have interviewed nearly 100 people. “With such network, it is easier to find out project, personnel and resources.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Under the support of such network, over the more than one year, Jiuding Capital has made remarkable achievements in the above-mentioned fields. Many people are surprised at “Jiuding Capital’s vigorousness”. But Lei CAI said, in terms of the quantity per capita, Jiuding Capital’s investment scale and investment speed are very normal. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Lei CAI also revealed that Jiuding Capital’s internal requirements in rapid response to specific project and strict control of investment standard are very rigorous. In fact, Jiuding Capital has given up the investment opportunities of some enterprises, of which some have been listed in recent years. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “Such enterprises were no less than 10 ones.” But Lei CAI was not willing to reveal the names of these enterprises.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Moreover, the industry gives Jiuding Capital another evaluation - “independence”. Jiuding Capital rarely allies itself with other institutions for investment. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “In truth, Jiuding Capital is willing to cooperate with proper investment institutions, and a large part of the projects have been invested with other institutions. Of course, a majority of the projects have been invested exclusively. It is possible to be our difference from some institutions.” Most of the projects have been discovered through Jiuding Capital’s network system; moreover, Jiuding Capital mainly depends on its own professional team to make an independent judgment. Lei CAI said, “We have made a decision, others did not appear, let alone cooperate with them.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Internal cause behind vigorousness2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Behind seemingly vigorous logic is Jiuding Capital’s long-term strategic insight. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

In Lei CAI’s opinion, this is an era of creating “commercial miracle”. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

He firmly believes that Chinese is certain to be richer and richer, and China has a bright future. Then, the investment industry is worth struggling for. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Some promising sectors, such as consumption, pharmaceuticals, etc., will meet a great opportunity. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “We will concentrate on the equity investment. This is our undertaking. Concentration makes use more professional and successful.” Lei CAI said.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

At the end of November 2009, Jiuding Capital established China’s first privately-owned RMB pharmaceutical industry fund, with the capital scale of 500,000,000 yuan. Authority of China pharmaceutical industry Bo YU become one of Jiuding Capital’s partners, and acted as general manager of Jiuding Capital Pharmaceuticals Fund. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Bo YU was graduated from Shenyang Pharmaceutical University. Before joining in Jiuding Capital, he had acted as general manager of Haihong Pharmaceutical Electronic Trading Center Co., Ltd., assistant president of Haihong Group, secretary general of China Pharmaceutical Elite Club, etc. Before that, he had worked at State Pharmaceutical Administration, State Drug Administration, etc.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Soon, Bo YU selected a group of talents from the pharmaceutical industry to build China’s largest pharmaceutical investment team. This team, with rich work background, knows well about China’s pharmaceutical industry and enterprises, for example, which enterprise has good varieties, which enterprise has the strongest R&D ability, which enterprise has the strongest sales channel…2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Within one year, Jiuding Capital Pharmaceuticals Fund has received many news of victory, settling in some domestic pharmaceutical enterprises in various regions, covering most of sectors in the pharmaceutical industry, such as R&D, manufacturing, sale, etc. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Before Pharmaceuticals Fund was established, Jiuding Capital has made good preparations. Through preliminary systematic investigation, Jiuding Capital discovered that more than 500 pharmaceutical enterprises met Jiuding Capital’s investment standard, and will invest tens of pharmaceutical enterprises. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Bo YU expressed so bluntly: “We have made the list of the pharmaceutical enterprises for direct investment, merger and integration, and then will further advance. Within this year, we are to complete our investment in several pharmaceutical enterprises. Next year, we will have a bigger plan. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Pharmaceuticals Fund is a good case for Jiuding Capital’s strict division of specialization. In such sectors as agriculture, consumer goods, etc., Jiuding Capital also has some strict requirements on the specialization. A detail impressed me that Jiuding Capital has invested 7 pesticides enterprises in succession. It is a typical case that Jiuding Capital is good at “intensive cultivation” and is keen on making big bets on some well-informed sectors. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

As far as the value-added services stressed by PE industry are concerned, Lei CAI think, “Without division of specialization, without rich accumulated resources of industrial investment cases, it is the empty talk to provide real value-added services.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Taking a pharmaceutical enterprise with strong R&D ability in South China, when Jiuding Capital invested the enterprise, it had the fixed assets of 20 million and 180 million cash. So to say, it was not in shortage of funds. The reason for introducing Jiuding Capital was that the enterprise valued the service provided by Jiuding Capital’s professional pharmaceutical team.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “In many cases, successful investment is not because of shortage of funds or the bidding price, but because of the comprehensive value that you can provide.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

PE’s enterprise-oriented growth2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

It seems to be a PE era. Almost all of new and old magnates in the capital circles join hands with PE industry. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Lei CAI indicated that, “Currently, PE Industry is hot somewhat in China. But it is merely a stage in the long-term development process. PE industry, just like other industries, has its ebbs and flows. For Jiuding Capital, we will hold fast to our set concept and strategy.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

In Lei CAI’s opinion, PE industry, indeed, can bring some extravagant profits in the short term, but it is not lasting. The law of industrial development is irresistible. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Lei CAI put forward an opinion that, PE industry has too many smart practitioners, but major practitioners are engaged in “investment”, and main targets are to invest several good projects. “We pay more attention to enterprises instead of investment. Jiuding Capital is an investment-oriented enterprise, targeting at a good investment enterprise.”2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Perhaps because of such a “differentiation” positioning, Jiuding Capital is “incompatible” with common institutions in the industry in investment strategy, partnership system, network layout, management mode, etc., but this is the original gene for Jiuding Capital to be a “rising force” in very short time. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

As for money-making, Lei CAI confesses freely that the enterprise, in nature, is to make money. When many institutions seize the opportunity to reap recklessly, Jiuding Capital focuses on the construction of foundation level. After the National Day, nearly 200-person team attended the 3-day concentrated training in Kuangou in the outskirt of Beijing. Such training is a quarterly routine training for the whole company besides the monthly routine training for various departments. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

Huge professional elite team inevitably means the higher operating cost. “Previously, it was a pool of “lake water”, we found “food” calmly. Currently, the competitors are crowding into the “lake”, the lake water has been disturbed. It is no longer easy to find out proper projects, so our investment cost rises.” For this case, Lei CAI indicates that Jiuding Capital attaches more importance to long-term benefit. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “If an enterprise does not pay too much attention to current yield, so it is certain to be the enterprise with the loftier ideal and the greater pattern.” Lei CAI said.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

If the preliminary stage that Jiuding Capital successfully invested some projects like Gifore was called “1.0 Era”, the “savage growth” stage of Jiuding Capital’s investment and management system since 2010 was called “2.0 Era”.2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

 “Jiuding Capital is certain to go on 3.0 Era, 4.0 Era…” Lei CAI firmly believes. 2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司


2nQ九鼎投资(600053.SH)_上交所私募股权投资领域上市公司

EN | CN