JD Capital:Stick to Investment Focus to Go Cross Shifting Period
2024-12-23
Abstract:Cost decreasing and benefit increasing, innovation and internationalization
On December 10-11, the 24TH China Venture Capital & Private Equity Annual Forum was held in Chongqing under the guidance of the Office of Financial Committee of Chongqing Municipal Committee, hosted by Zero2IPO Ventures and PEdaily.cn, co-hosted by Yufu Holding.
Regarded as a crucial and authoritative barometer that gauges the trends and developments of the equity investment industry in China, the core theme of this Forum is “Cultivating Novelty Amidst Myriad Transformations”.
At the event, Mr Shi Wei, managing partner of JD Capital, was invited to participate in the sub-forum themed "Thoughts and Choices in Investment Tracks". He shared his insights and perspectives on the investment strategy within the primary market.
The following is excerpted from his remarks:
Hello everyone, I am Shi Wei from JD Capital, A private equity investment institution established in 2007. JD Capital is also an A-share listed company. Up to now, we have managed a total fund size of over RMB 38 billion and have invested about 370 projects, of which 64 enterprises have been listed on domestic and foreign capital markets.
Over the past 17 years, we have always focused on three major investment areas: advanced manufacturing, healthcare and consumer. At present, we still have a team of more than 100 people for long-term investigation in these three areas. However, we will adjust each detailed segment according to market changes. In the field of advanced manufacturing, we are currently focusing on semiconductors, new energy, smart equipment and new materials. In the field of healthcare, our focus is on biomedicine and health services. At the same time, consumer is still an investment area that we continue to pay attention to.
For JD Capital, on top of specific strategies such as industry selection and investment stage, it is more important to stick to investment focus.
Over the past decade, we kept a large team focusing on many industries. We concluded that the first thing for investment is to keep focus, secondly is to grasp the underlying law of industry development, and thirdly is to be clear about our core competence circle.
In the past, we have also tried early-stage investment, holding investment and other modes. However, when we look backwards, we realized that we are better at long-term and mature period investment. We hope that we can invest in the growth period of enterprises and help them grow from outstanding to excellent.
As a PE institution, the underlying logic behind our choice of specific investment tracks comes from our judgment of the stage of economic development.
In the more than ten years that we have been investing, more than half of the time was in the stage of China's rapid economic development with a prosperous situation in various industries. When the IPO policy was relatively flexible, there was opportunity to obtain considerable investment returns by finding the leading enterprises in each industry to invest in and realize exit.
But now, the whole macro economy has entered into a shifting period, and the internal driving force of development has fundamentally changed. In the past, economic development mainly relied on the input of massive resources, large amount of capital, cheap labor and other factors. But today, this pattern of massive resource investment for growth is no longer sustainable. Data shows that in the past, we consumed about half of the world's mineral resources every year and ended up creating only about 30% of the output, which is not sustainable. At the same time, the aging population is eroding our cheap labor dividend.
Therefore, following the old investment logic in the new stage is doomed to fail. Today, we believe that the relatively certain trends are: cost decreasing and benefit increasing, innovation and internationalization, which are the three key words of our current investment strategy.
Under the logic of these three words, we will carefully choose the investment industries in combination with specific industry trends and policies, and insist on investing in technology and new quality productivity. At the same time, we have not given up on consumer for investment. After all, the comparative advantage of China's unified large market is very obvious. In the future, it is still possible to find excellent enterprises by exploring investment opportunities along the logic of consumption upgrading and the rise of domestic goods.
In the field of medical and healthcare, we have invested in a large number of enterprises in various modes such as equity participation and holding investment in the past, focusing on subdivisions of pharmaceutical intermediate, API, preparation, generic medicine, medical device and medical service institution. In recent years, the continuous introduction of relevant policies in medical field has brought many challenges to "learning" type of enterprises on the one hand, but on the other hand, it also strongly supports and encourages continuous innovation in medical industry. Therefore, enterprises with innovative technologies and innovative capabilities that can become the beneficiaries of policies are also our focus in the field of medical health care.
The market has hot spots and fluctuations at every stage. As for us, being patient and invest in at the right time with a relatively reasonable price is the most important thing in investment.
On the whole, as a fund manager and trustee, we should not only take social responsibility into account and adhere to policy orientation, but also create good returns for our investors.