Jinshajiang’s new energy “dead” has been set, and the dream should wake up.

After dragging it for nearly a year, AESC, the Japanese power manufacturer that once ranked second in the world, sold the case in China and eventually fell through.

A week ago, Nissan officially announced that Nissan would give up its sale of its power battery joint venture AESC because of the “lack of money” from China’s purchaser Jinshajiang Capital. The transaction has been postponed several times before.

This merger and acquisition case was once considered as a typical representative of “introducing foreign advanced power battery companies” and also created a record of the transaction volume of overseas power battery companies, but why did it end in failure? Also known as the Jinsha River, Jinshajiang Capital is far less successful than Jinshajiang Venture Capital in its investment performance.

In the story behind it, the car stuff was explored in depth.

Once the power battery star merger case

Time to return to August 8, 2017, Nissan announced that it will sell its power battery subsidiary AESC to Jinshajiang Capital from China.

AESC is a joint venture between Nissan and Japan Electric Company (NEC), which is stronger than the power battery lithium manganate technology route. Nissan's world-famous pure electric vehicle is equipped with batteries from AESC. In the earlier pure electric vehicle market, the wind was almost the only opponent of Tesla (sales). Thanks to this, AESC's power battery sales ranked second in the world in 2014, second only to Sla supporting the power battery Panasonic.

▲Learning early version

However, with the rise of Samsung and LG on the power battery and the rise of China's power battery producers led by BYD, the status of AESC has begun to decline - although its total sales of power batteries are rising, but As a car company subsidiary, you can't open up customers like Samsung or LG.

At the same time, Carlos Ghosn, chairman of the Renault-Nissan Alliance, began to dislike AESC "not to live up to expectations." On the one hand, it is the AESC lithium manganate power battery route, which is the weakest in energy density. The early years of the wind have been short legs with a battery life of less than 300 kilometers. On the other hand, although AESC also developed a higher energy density of three The yuan system NCM622 power battery, it is because AESC is not going to scale, the production cost is also difficult to come down. In 2015-2016, AESC was in a state of loss.

Ghos, who has been trying to improve the competitiveness of the Renault-Nissan Alliance by reducing costs, has clearly introduced LG, which is more mature in technology and more competitive in battery prices, as its future power battery supplier. In 2016, Nissan for the first time clearly stated its intention to split the AESC for sale.

In 2017, China's Jinshajiang Capital came to the door and expressed its willingness to buy. According to Bloomberg's report, the purchase price agreed by the two parties was $1 billion. This is the first attempt by Chinese capital to acquire Japanese power battery manufacturers, and it is also the largest M&A case for overseas power battery companies. For the old stage of AESC, the former power battery, the market has not been underestimated. The analysis once believed that with the huge new energy vehicle market in China, AESC will welcome a new life in China.

For Nissan, this transaction not only sells AESC for a good price, but more importantly, as a trading condition, AESC, which was acquired by Jinshajiang Capital, will provide domestic power batteries for other pure electric vehicles such as the wind and even Nissan. To help the latter's localization of pure electric vehicles to enhance the competitiveness of China's largest new energy vehicle market.

The mysterious buyer from China, Jinshajiang Capital, was reported by the media as Zhu Jinhu’s “Jinshajiang Venture Capital”, but it was actually an independent institution. Although Jinshajiang Capital said on the official website that it is complementary to Jinshajiang Venture Capital in terms of investment layout, Zhu Xiaohu, the head of Jinshajiang Venture Capital, was indeed brought into the investment industry by Wu Shenjun, the head of Jinshajiang Capital.

▲ Wu Shenjun, founder of Jinshajiang Capital

Like Zhu Xiaohu’s “Jinshajiang Venture Capital”, Jinshajiang Capital does not intend to bear all the risks of this merger alone. Instead, they found a group of A-share listed companies trying to take a share in the power battery boom, and jointly funded the acquisition of a $1 billion M&A fund to complete the acquisition of AESC's existing assets. At the same time, it plans to invest another 12.5 billion in the AESC China plant with a total capacity of 20Gwh in Zhenjiang to produce ternary lithium batteries.

According to the arrangement of Tianfeng Securities Research Institute, the main business is Yufu, which is a textile company. Camel shares, which are made of lead-acid batteries for vehicles, and Ningbo Huaxiang, which is equipped with auto parts, plan to invest no more than 100 million US dollars. Strait Petrochemical, which is engaged in oil and petrochemical trade, is preparing to invest 870 million yuan and 100 million US dollars. The Dagang shares, which are mainly engaged in industrial park development and municipal construction, promised to contribute 1.53 billion yuan.

It is worth noting that the above-mentioned listed companies are not very thick at home. At that time, the market value of the listed companies was no more than 15 billion yuan, of which the richest Ningbo Huaxiang net profit for the year of 2016 was 710 million yuan. Dagang shares and Straits Petrochemical were in 2017. There was a slight loss in the first half of the year. This means that if they are to invest, they must use additional financing.

The direct sponsor of the acquisition, Jinshajiang Capital, has a total planned investment of only 600 million yuan. The industry insiders ridiculed that this is an investment institution-led “four-two-pound” – Jinshajiang has noticed that Nissan is eager to get rid of AESC, obtaining the license of Nissan with the prospect of the Chinese market and the acquisition commitment, and using the status and research technology of AESC. Lobbying a group of domestic companies wish to stand on the air outlet of new energy vehicles, swaying both ends. The means cannot be said to be inflexible.

Why did the acquisition fail? Not just "lack of money"

Nowadays, with the announcement of a paper by Nissan, the “four twos” of the Jinsha River apparently failed to move the pound. With a investment of 600 million yuan in the amount of nearly 20 billion yuan ($1 billion + 12.5 billion yuan), this leverage is obviously a bit high.

In the end, “no money” became the direct cause of the failure of this power battery giant cross-border merger. The capital side of Jinshajiang’s entanglement has been withdrawn for various reasons, and has not made huge promises. In the end, there was only one, Dagang shares. In order to seize this opportunity to enter the power battery, the controlling shareholder of Dagang shares, Ruirui Holdings, tried to transfer 12.5% of the shares and also stopped because of the termination of the acquisition. After this wave of failure, the stock price of Dagang shares has dropped from 8.2 yuan to 5.3 yuan, with three downsides in the middle.

The car and the industry exchanges found that the direct reason for the failure of the acquisition - "no money" - is itself a result of a series of factors.

First of all, the increasingly loud voice of Ningde era and the pursuit of capital after listing in 2018 made the head effect of the power battery industry appear, which obviously hit the capital party's investment confidence in AESC.

▲AESC power battery pack

Although in the announcement of the Chinese acquirer, AESC has NCM622 ternary lithium battery technology with an energy density of 230 WH/kg, but when its Chinese factory was built or even put into production, it was 2019 or even 2020. At that time, the more advanced NCM811 ternary lithium battery of domestic battery manufacturers may be put on the market and the market prospect of AESC entering China is still doubtful.

Secondly, there are many difficulties in introducing AESC technology into China. How to place AESC's Japanese-based talent team and how to overcome cultural differences between Chinese and Japanese teams to conduct business is a typical problem facing cross-border mergers and acquisitions.

Third, the state’s regulation of funds going to sea has tightened, and there is a certain relationship in this matter. A securities industry official said to the car. At the moment when the country is keeping a close eye on foreign exchange reserves, the regulators will be more cautious about cross-border mergers and acquisitions. If you spend a lot of money to buy a "backward asset" that is unclear and may eventually be defeated in the competition, then the regulatory approval of the acquisition will be difficult to pass.

Finally, it is the resource dispatching capability of the Jinsha River itself and the coordination ability in this M&A alliance. It seems that it has not been able to convince the participants.

It can be seen from the capital contribution of the parties that the Jinshajiang Capital, as the promoter of the merger, has the least amount of funds invested in the acquisition. The investment funds promised by other M&A participants are highly consistent, and the balance of power means no dragons.

At the same time, as an investment institution, Jinshajiang Capital itself is difficult to provide strategic resources beyond finance, which can only incite a group of similarly weak small-volume companies. The weak alliance has not formed a strong enough synergy.

In short, the employers who have tried to participate in this merger have gradually realized various difficulties in the process of advancement and have withdrawn. The only remaining Dagang shares suffered an “impulse penalty” on the stock price.

For Jinshajiang Capital, the failure to acquire AESC means that Jinshajiang Capital has lost the most core and most capable venture capital brand in its new energy vehicle industry.

In fact, Jinshajiang Capital began to add new energy vehicles from 2012, and set up a bureau through investment.

Layout of new energy vehicles for 7 years but missed the head project many times

In 2012, Jinshajiang Capital, which has not yet been differentiated from Jinshajiang Venture Capital, invested in the wheel motor company Proudian, now headed by Jinshajiang Capital, and vigorously explored investment in new energy vehicles.

Subsequently, Jinshajiang Capital led a $130 million investment in power battery manufacturer Boston Battery, turning the American company into a company based in China. After accepting this investment, the headquarters of Boston Battery moved from Boston to Beijing, and set up factories in Puyang, Jiangsu and Beijing. The annual production capacity of ternary lithium batteries reached 1Gwh. When the Ningde era has not yet grown up, Boston's battery shipments have once ranked in the top ten in the country, but with the rise of all the heroes, Boston's power battery has long been seen.

In another technical direction of power batteries, Jinshajiang Capital invested in Taiwan's Likai Electric, a supplier of cathode materials for lithium iron phosphate batteries. Also in the field of power batteries, Jinshajiang Capital has invested in the next generation of solid-state battery startup SEEO. However, the volume of the two is not large, and it is also an insignificant role in the industry chain.

Mergers and acquisitions AESC is the most attractive star project operated by Jinshajiang Capital. However, due to its own and external constraints, it may not be a chance to become famous.

After the merger of AESC, the Jinshajiang Capital played a much bigger-looking bureau in February this year: signed with Zorlu, Turkey's largest cobalt mining company, and by 2023, the two sides jointly carried out a total of 4.5 billion US dollars in Turkey Invest, build a new battery production base for powering cars. According to the agreement, each side will contribute 50% of the funds, and when fully completed, it will supply batteries for 500,000 electric vehicles.

According to the 50% investment, Jinshajiang Capital will spend US$2.25 billion in the future. As a successful investment institution, it is obviously unlikely that Jinshajiang Capital will draw such money. Will the acquisition of AESC’s four-and-two-pronged approach be repeated? It is still unknown.

In addition to investing in power battery manufacturers, Jinshajiang Capital also invests in downstream new energy vehicle manufacturers. In 2016, Jinshajiang Capital invested in two new vehicles, Aikangnik and Guoneng New Energy. In the investment in Guoneng, Jinshajiang Capital is the leading investor in the 4.2 billion yuan. In March of this year, Jinshajiang Capital announced that it would invest 500 million US dollars in investment. In addition, Jinshajiang Capital also participated in the bidding for Fisker, but was eventually won by Wanxiang Group.

▲Guo Neng New Energy CEO Jiang Dalong

The hand of Jinshajiang Capital also reached the top of the industrial chain. In cooperation with Turkey's Zorlu power plant, Jinshajiang Capital is also preparing to participate in the latter's nickel-cobalt plant 50%.

In 2017, Jinshajiang Capital also tried to acquire a 20% stake in Chilean SMQ, one of the world's three largest lithium mining giants, for US$1.9 billion. This was originally an investment that might make Jinshajiang Capital famous. However, the final SMQ was won by Tianqi Lithium Industry.

Conclusion: Can Jinshajiang Capital's new energy car dreams work?

In the field of new energy vehicles, Jinshajiang Capital has an ambition to try to build a layout that covers the upstream and downstream of the industry and open up the industrial chain.

However, from the results, the projects invested by Jinshajiang Capital are mostly second-tier and even third-line players in today's industry competition, and there is no one-on-one existence. On the contrary, the head projects in the Jinsha River capital phase, such as SMQ and AESC, failed to win. In view of Wu’s previous experience in investing in photovoltaics, in the wave of new energy, he has been rushing through two vents. He is now a big early day.

At present, the capital invested in the field of new energy vehicles is becoming more concentrated, the amount of funds is getting larger and larger, and the strategy is getting stronger and stronger. Strategic investors have delineated their head projects. As an investment institution, there are not many opportunities left for the performance of the Jinsha River capital.

The "losing" of Jinshajiang Capital also shows that the investment in the field of new energy vehicles has already passed the stage of simply taking money. The strategic resources of the whole industry are the focus of the next competition.

The page contains the contents of the machine translation.