2022.12.12
JunHe recently assisted HSBC Bank (China) Company Limited in a financing transaction to provide a RMB M&A loan facility to Nankong Zhonglian Industrial Park’s M&A Fund. The M&A loan was drawn at the end of September 2022 with the successful closing of the M&A transaction.
Nankong Zhonglian Industrial Park M&A Fund was jointly promoted and established by Nanshan Holding (SZ.002314) as the cornerstone investor, GSUM Fund Management as the fund manager and Shenwan Hongyuan as the strategic investor. It is the first M&A fund in China to invest in the M&A of industrial park projects in urban areas such as the Yangtze River Delta, the Greater Bay Area, Beijing and other core cities which meet the asset criteria of publicly offered infrastructure REITs and exits from such projects mainly by way of publicly offered infrastructure REITs and block trade. The first industrial park project acquired by the M&A fund is in Baoshan District, Shanghai.
In the international capital market, M&A loans are widely used by PE funds for the leveraged buyout of target enterprises/assets, with the assets and future incomes of the acquired target enterprises as the guarantee and repayment source. Fund subsidiaries usually provide comprehensive guarantees to banks using the acquired target enterprises/assets including but not limited to property, equity and receivables, etc. Fund entities and fund investors also provide different credit enhancement measures to address the possible credit risk exposures. In addition to designing and structuring the financing guarantee structure of traditional M&A loans, JunHe has expertise in the special business needs of industry M&A funds. JunHe was innovative and assisted HSBC in optimizing aspects of the loan succession, as well as the cross-border payment and fund escrow to ensure that the commercial demands of all parties were satisfied while confirming the safety of the loan funds.
JunHe acted on behalf of the lender in this project, and participated in and led the whole transaction process covering the preliminary feasibility study, the transaction structure design, and multiple rounds of negotiations with the fund team and its legal counsel. JunHe’s team assisted all the parties in signing the contracts in multiple locations, and perfected multiple types of guarantees. They provided constructive legal advice with respect to the key points and difficulties in the transaction.
Partner LU, Juyi led this project.
