Shenzhen Innovation and Entrepreneurship Bonds Boosting Development Of Innovative Firms and Start-up

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Tuesday, March 20, 2018  08.44AM / ChinaEquity Group 

Recently, Shenzhen Capital Group Co., Ltd ("SCGC") issued the second tranche of Innovation and Entrepreneurship Corporate Bonds via Shenzhen Stock Exchange (“SZSE”), which also issued a Letter of No Objection as regards the 680 million yuan private placement of Innovation and Entrepreneurship Bonds by Shenzhen Co-Stone Asset Management Co., Ltd. ("Co-Stone Asset") and 800 million yuan private placement of corporate bonds of the same nature by ChinaEquity Group ("CEG" for short). 

Since the release of the Guidance of China Securities Regulatory Commission on Lauching the Pilot Program of Innovation and Entrepreneurship Bonds, the Innovation and Entrepreneurship Bond pilot programs for venture capital firms have been ever expanding. 

With venture capital firms as the issuer, corporate bonds of innovation and entrepreneurship nature are mainly used to raise capital to invest in the equity products of innovative companies and start-ups in their seed, start-up and growth stages. For venture capital firms, the bonds would not only broaden financing channels and optimize the debt structure, but would also bring funds at their disposal to launch investment products, and boost the confidence of limited partners. 

The firms could also expand the scale of innovation and entrepreneurship related equity investment with more long-term and lower-cost fund. The large-scale Chinese investment group SCGC has issued the first tranche of "17 Venture S1", a corporate bond of innovation and entrepreneurship nature, in the amount of 500 million yuan, with a maturity period of 5 years and an interest rate of 5.20% which is much lower than the average interest rate in the bond market in the same period. 

The pilot projects for Innovation and Entrepreneurship Bonds for high-quality venture capital firms will better support the development of these firms and facilitate the implementation of innovation-driven development strategies. The debt rating for the Innovation and Entrepreneurship Corporate Bonds issued by SCGC, Co-Stone Asset and CEG are AAA. SCGC will primarily use the raised capital to set up a venture capital fund, investing in technologies of independent-innovation and emerging industries supported by the state. Co-Stone Asset will mainly invest the "Industry 4.0" sectors represented by robotics, intelligent manufacturing, intelligent production, and intelligent plants. 

CEG will focus on providing capital services to companies of new technologies, new models or new products through the entire industry chain. Used effectively, the raised funds shall benefit more innovative company and start-ups. 

After years of development, servicing and supporting innovation and entrepreneurship has become a distinctive brand feature of SZSE. By now, SZSE has handled Innovation and Entrepreneurship Corporate Bond and Innovation and Entrepreneurship Convertible Bond issuance for 29 companies, with over 2 billion yuan of funds raised via these projects. 

Guided by China Securities Regulatory Commission, SZSE will relentlessly push forward the sound development of corporate bonds of innovation and entrepreneurship nature, continue to provide services and support to promote innovation and entrepreneurship in Shenzhen market, build a world-leading innovation capital formation center at full strength, and proactively improve its capabilities in serving the quality development of the real economy.  

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