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Zenghua Du

Diplômé DBA - 2019

Titre de thèse

The hybrid operation models of Chinese M&A fund under the constrain of contractive financial policies: multiple case studies

Superviseur(s)

Jean-Jacques Chanaron
Purpose Merger and acquisition (M&A) is extremely sophisticated, which is referred to as “a pearl on the crown” of investment bank business in Wall Street. M&A fund pertains to be a high-order form of M&A business throughout the course of development. The research will provide forceful theoretical reference and action guide for Chinese M&A fund operation, instruct the fund to better perform international M&A practice by corresponding theories, and point out the direction for the operation of Chinese M&A fund. Design/methodology/approach The thesis takes multi-case analysis as the main research method, and chooses three representative cases of Chinese M&A fund operation, including HC SemiTek’s M&A of MEMSIC, Miteno’s M&A of BBHI, JCET’s M&A of STATS ChipPAC, to explain how Chinese M&A fund operates, and how should organization governance agency design and form suitable transaction mode to handle principal-agent relation. Findings As found in multi-case research, the operation of Chinese M&A fund under the constraint of contractive financial policies can subtly design governance structure to well handle principal-agent relation. To be specific, there are three modes of operation. Mode I: General operation mode for Chinese M&A fund: aiming at international target companies, Chinese M&A fund primarily raises fund from investors, including individual investors and institutional investors. Strong stockholders and stakeholders in Chinese listed company should initiate and establish the M&A fund, and set up SPV to merge and acquire the target company. The listed company then indirectly merges and acquire the equity of the target company on the basis of M&A fund by issuing shares, raising fund and paying share consideration to the shareholders of M&A fund. In this way, shareholders of M&A fund turn to be shareholders of the target company to exit investment. Mode II: Asset management operation mode for Chinese M&A fund: given the high value of international target companies, limited own fund in the merging and acquiring company and diversified channels of fund raising, it is necessary to raise fund by asset management products such as private equity fund, trust, fund subsidy asset management plans. Strong stockholders and stakeholders in Chinese listed company should initiate and establish the M&A fund, and set up SPV to merge and acquire the target company. The listed company then transfers the equity of the targeted company on the basis of M&A fund by issuing shares, raising fund and paying share consideration to the fund. In this way, the M&A fund turns to be shareholder of the listed company. Mode III: Government operation mode for Chinese M&A fund: target companies engaged in industries encouraged and supported by the government can finish international M&A under the lead of the government. Chinese listed company should cooperate with external investors and industry fund to establish the M&A fund and set up SPV to merge and acquire the target company. Subsequently, the listed company should issue shares to merge and acquire investors’ shares in M&A fund and pay them share consideration to exit investment. Research limitations/implications Considering limitations of this research, future research can be further developed in the following three aspects. 1. Quantitative analysis research method should be employed. The merging and acquiring party discloses insufficient details and data, and lacks empirical support of measurement and regression. With the enactment of The Interim Practices for Private Investment Fund Supervision and Management in China in the future, M&A fund information disclosure and data collection work will be further improved. 2. With the development of asset management industry in China, follow-up researches should be continually made. The issue of new asset management regulations in 2018 pushes forward the development of M&A fund. More follow-up researches concerning Chinese f