Yongye International Buyout ##VERIFIED##
Yongye International, Inc. is a leading crop nutrient company headquartered in Beijing, with its production facilities located in Hohhot, Inner Mongolia, China. Yongye's principal product is a liquid crop nutrient, from which the Company derived substantially all of the sales in 2013. The Company also produces powder animal nutrient product which is mainly used for dairy cows. Both products are sold under the trade name "Shengmingsu," which means "life essential" in Chinese. The Company's patented formula utilizes fulvic acid as the primary compound base and is combined with various micro and macro nutrients that are essential for the health of the crops. The Company sells its products primarily to provincial level distributors, who sell to the end-users either directly or indirectly through county-level and village-level distributors. For more information, please visit the Company's website at www.yongyeintl.com.
yongye international buyout
Yongye International, a Chinese fertiliser maker fails to build its repo again in the market even by a buyout offer from Morgan Stanley. The company in order to raise its public confidence manipulated some accounting standards.
As the news of buyout spread all over, the short interest on the company declined to 1.5% from 8% on September 10. In short selling the investors are not involved in acquiring the shares with a long-term vision. It only goes on in purchasing the same with an intention to sell it off for a short term gain. And by betting a lower price they can buy back the shares again.
A key distinction of our global practice is the integration of our international lawyers with a strong local law practice in many of our offices. We have approximately 20 Hong Kong-qualified solicitors who work closely with our international lawyers to deliver integrated U.S., Hong Kong and English legal services seamlessly to our clients. The practice focuses on Hong Kong-listed IPOs and other capital markets transactions, as well as private equity and M&A transactions, and general corporate and compliance advice.
Compared with 2020 statistics, the investment distribution based on financing stages in 2021 exhibited a slight increase in start-up and early-stage investments, a continued decrease in buyout investments (including management buyout, management buy-in, leverage buyout and turnaround or restructuring stages), a significant expansion in growth-stage investments, a meaningful decline in the private investment in public equity (PIPE) financing and a further decline in mezzanine and pre-initial public offering (pre-IPO) stage investments. According to AVCJ Research, investments in buyout transactions dropped from US$16.920 billion or 16.5 per cent of total investment value in 2020 to US$12.323 billion or 9.7 per cent of total investment value in 2021; investments in PIPE financing dropped from US$19,247 billion or 18.8 per cent of total investment value in 2020 to US$6.274 billion or 4.9 per cent of total investment value in 2020; investments at expansion and growth stages still stayed ahead of other investment stages in terms of the value, at US$78.205 billion in 2021, while representing a continued increase in terms of the proportion, from 48 per cent of total investment value in 2020 to 61.3 per cent of total investment value in 2021; investments at mezzanine and pre-IPO stages slightly decreased from US$10.731 billion in 2020 to US$9.628 billion in 2021; and investments at the start-up and early stages represented a bigger proportion of total investment value in 2021 than in 2020, expanding from 6.2 per cent of total investment value in 2020 to 8.6 per cent of total investment value in 2020.
The rise in China-based private equity buyouts in 2020 is consistent with the general trend in that space since 2010. In general, buyout investments in China have remained relatively less frequent in comparison with many other jurisdictions. Buyout activities experienced an increase in 2010 and 2011, further strengthened in 2012 to 2014 amid the growing popularity of going-private transactions involving China-based companies, particularly companies listed in the United States, and increased significantly again in 2015 as many US-listed Chinese companies received going-private proposals at the prospect of seeking a future listing on China's A-share market or the Hong Kong Stock Exchange. After experiencing a decline in 2016 and a short recovery in 2017, buyout activities in China hit a record low in 2018 and further dropped to the lowest point in history in 2019, and going-private activities were almost suspended. Both buyout and going-private activities experienced a strong rebound in 2020, which did not continue into 2021. Based on statistics obtained through searches on the Thomson Reuters database Thomson ONE, of the 259 going-private transactions announced since 2010, 41 did not proceed and 167 have closed (12 closed in 2010, 16 closed in 2011, 24 closed in 2012, 26 closed in 2013, six closed in 2014, 28 closed in 2015, 17 closed in 2016, eight closed in 2017, two closed in 2018, 10 closed in 2019, 12 closed in 2020 and six closed in 2021). As at 31 December 2021, 34 going-private transactions were pending, including two announced in 2012, two announced in 2014, two announced in 2015, three announced in 2016, one announced in 2017, three announced in 2018, two announced in 2019, 13 announced in 2020 and six announced in 2021.
NDRC regulates Chinese companies' outbound investment activities on a project-by-project basis through a multilayered approval and filing regime. Under the Administrative Measures for Enterprise Outbound Investment (Regulation No. 11), which took effect on 1 March 2018, a Chinese investor is required to make a filing with NDRC or its local counterpart (depending on whether the Chinese investor is a centrally managed SOE and whether the investment size (including equity and debt investments made by not only the Chinese investor but also the offshore entities controlled by the Chinese investor) reaches US$300 million) and obtain an NDRC filing notice for an outbound investment transaction that does not involve a 'sensitive country or region' (countries and regions that are subject to investment restrictions under international treaties, war or civil commotion, or that have no diplomatic relations with China) or a 'sensitive industry' (which was further clarified by NDRC in 2018 (see below for more details)), and, in cases where the transaction involves a sensitive country or region or a sensitive industry, the Chinese investor is required to apply for and obtain an outbound investment approval from NDRC. In parallel with Regulation No. 11, NDRC promulgated a Catalogue of Sensitive Industries for Outbound Investment 2018 (the Sensitive Industries Catalogue) in January 2018, with effect from 1 March 2018 and released the Answers to Frequently Asked Questions Concerning Outbound Investment by Enterprises (the Answers to FAQs) in June 2018 on its website (which was updated in July 2021), providing clarification for frequently asked questions regarding the application of Regulation No. 11. NDRC made rather restrictive interpretations on the scope of sensitive projects. These industries or projects include real estate, hotels, offshore equity investment funds or investment platforms without specific underlying industrial projects, sports clubs, cinemas and the entertainment industry. The designation of real estate, hotels and offshore equity investment funds or investment platforms without specific underlying industrial projects as sensitive industries has drawn substantial attention, as there were significant amounts of investment in these industries both in numbers and deal values in the few years before 2018. Regulation No. 11 adopts a control-based approach that includes in the verification scope all sensitive projects made by offshore entities under the control of Chinese investors, regardless of whether or not the Chinese investors provide financing or guarantees for these projects. The Answers to FAQs also include detailed explanations and instructions for each of the sensitive industries to clarify the scope of application of sensitive projects.
The tightened control on outbound investment activities and capital flow not only affects Chinese investors but is also relevant to international private equity participants from at least two perspectives: when a private equity participant intends to partner with a Chinese investor in M&A activities outside China or when a private equity participant is considering a Chinese buyer for a trade sale as its exit route. In these scenarios, the private equity investor must take into account the potential risk that the Chinese party may not be able to come up with sufficient funds offshore in time to complete the transaction offshore or ultimately complete the transaction. Further, when private equity investors consider a Chinese buyer as a potential exit route, in addition to the completion risk, a private equity seller would be well advised to also consider the risk profile of the transaction and the target business in the context of Chinese regulations (including the relevant industry, the financing structure and the identity of the Chinese buyer) to evaluate the related risks and impacts, including reputational risks and social impacts, if the Chinese buyer was required to divest the business shortly after completing the transaction or was unable to provide the required funding offshore for the business, which might put stress on various aspects of the operation of the business and might also force a premature sale.
The United States, the European Union (EU) and other countries scrutinise or regulate international business activities, including relevant Chinese outbound investment activities, to achieve objectives related to, inter alia, national security, foreign investment control and anti-monopoly. In connection with Chinese investments in the United States or EU countries, the relevant parties should be aware of potential non-Chinese approvals that may be mandatory or necessary in the jurisdiction where the target is located depending on the nature and size of the transaction, which may include US and EU merger control review, and a Committee on Foreign Investment in the United States (CFIUS) review. 041b061a72