SCARLET Equity Investment Fund

element

Fact sheet

Remarks

Fund name

Yangtze River Anxin Green Carbon Science and Technology Innovation Fund (Limited Partnership) (tentative name).

Fund Overview

1. Background

Nanjing Public Relations Association initiated relevant units in Jianye District, trying to create a three-party interaction model of talents, projects and funds by forming a "government + fund + science and technology innovation center";

2. Purpose

Through the establishment of the fund, we will introduce professional investment, management, operation talents and capital capital to help the growth of Nanjing's science and technology innovation projects and achieve the goals of the National 14th Five-Year Plan.

3. Organizational structure

Please fill in the background, purpose, organizational structure, etc. of the fund initiation

Fund size

Total size: 200 million fund size

Contribution schedule: one-time contribution of 200 million

Duration of the Fund

Investment period 5 years + exit period 2 years

In principle, it should not exceed 8 years (angel funds shall not exceed 10 years), of which the investment period shall generally not exceed 5 years.

Fund sponsor

Anxin Qianhong Investment Co., Ltd

Shenzhen ScarletAsset Management Co., Ltd

Fund Manager/Tong Partner 1 (GP).

Organization Name: Anxin Qianhong Investment Co., Ltd

Registered capital: 80000000 yuan

Registered address: Unit E, 22nd floor, Nord Financial Center, No. 1006, Fuzhong 3rd Road, Futian District, Shenzhen

Legal representative: Zhou Lifeng

Registration number: GC1900031559

Contact: Zhang Zhenjiang

Contact: 15001241811

E-mail: zhangzj1@essence.com.cn

General Partner 2

（GP）

Organization Name: Shenzhen ScarletAsset Management Co., Ltd

Registered capital: 100 million

Registered address: Room 201, Building A, No. 1 Qianwan 1st Road, Qianhai Shenzhen-Hong Kong Partnership Zone, Shenzhen (settled in Shenzhen Qianhai Commercial Secretary Co., Ltd.).

Legal representative: Han Qing

Registration number: P1062894

Contact: Lina Huang

Contact: 13851477790

E-mail: chairmanhan@sinoscarlet.com

Limited Partner (LP) Fund Manager (GP).

It is proposed to apply for Jianye District

Investment

Contribution ratio: 24.5%.

Capital contribution: 49 million

The largest shareholder: the second largest shareholder

Government industry funds/guidance funds are not the largest shareholders

Intend to apply for Nanjing City

Percentage of capital contribution

Contribution ratio: 24.5%.

Capital contribution: 49 million

The largest shareholder: the second largest shareholder

The total capital contribution at the city and district levels generally does not exceed 30%, and the total capital contribution at the city and district levels of angel fund projects does not exceed 49%.

Fund whether

Settled in Jianye

ü Settle in Jianye      □ Do not settle in Jianye

The fund needs to be settled in Jianye.

Whether the general partner is settled in Jianye

ü Settle in Jianye      □ Do not settle in Jianye

GP needs to settle in Jianye.

Whether the administrator is

Settled in Jianye

□ Settled in Jianye √ Not settled in Jianye (Note: The manager Anxin Qianhong Investment Co., Ltd. (hereinafter referred to as "Anxin Qianhong") was established in 2010 and is a member of the National Development and Investment Group Co., Ltd. Anxin Securities Co., Ltd. (hereinafter referred to as "Anxin Securities"). A wholly-owned private equity investment fund subsidiary, with more than ten years of rich investment experience. Anxin Qianhong shareholders have strong background, rich capital market resources and operation experience, the company has been registered in Shenzhen. Anxin Qianhong shareholder Essence Securities has 45 branches and 316 securities business departments in 26 provincial-level administrative regions, customer resources throughout the country, and has a good cooperation foundation with leaders in various industries, which can give full play to local service capabilities and national resource advantages to help the growth of Nanjing's science and technology innovation projects. ）

If you do not settle in Jianye, you need to explain the reasons.

Custodian Bank

ü Agree to be designated by Jianye District □ Do not agree to be designated by Jianye District

In principle, it is designated by Jianye District, please explain the reason if you do not agree

Fund management fees

2%/year

Pay according to the paid-in capital contribution, the proportion of management fees during the investment period and exit period shall not be higher than 2%, and no charge will be charged during the extended period.

GP or manager ranking in clearing or casting

Invest in the top 10 private equity fund subsidiaries of China's best securities firms in 2021

If yes, please fill in

Investment direction

and fields

Investment direction: new energy, advanced manufacturing, new materials, semiconductors, biomedicine, etc.

Investment field: leading science and technology projects at home and abroad and their upstream and downstream industry projects, mainly for equity investment in multiple target enterprises in the establishment and growth stage, forming an equity portfolio with optimal allocation of resources and effective diversification of investment risks.

Investment phase

Start-up and growth phases

Voting committee or observer seats are available

1 pcs

Jianye District requires at least one observer seat

Distribution of proceeds

(1) Distribution of income by the general partner

An annual management fee of 2% of paid-up capital is charged; At the end of the fund, the performance reward will be withdrawn at 20% of the net income of the fund, and if after deducting various taxes and fees, the net return on investment of the fund is lower than the bank loan interest rate of the same period, the fund manager will not withdraw the performance reward.

As a fund investor, the fund manager shall participate in the distribution according to the income distribution method of the fund investor.

(2) Distribution of income of limited partners After deducting various taxes and fees of the fund, it will be distributed according to 80% of the excess income of the fund.

List of historical and in-line projects

Filing certificate

Investment strategy

1、 Investment strategy - direct equity investment

(1) IPO advanced manufacturing: "Made in China 2025" pointed out that by 2020, industrialization will be basically achieved and the status of a manufacturing country will be further consolidated. Master a number of key core technologies in key areas. By 2025, the overall quality of the manufacturing industry will be greatly improved. By 2035, China's manufacturing industry as a whole will reach the middle level of the world's manufacturing power camp.

Focus on high value-added, high-output investment track, focus on the layout of core high-end equipment industry chain of technological innovation enterprises, including aerospace and satellite industry, ship and rail transit equipment, intelligent manufacturing equipment and new materials.

New energy: New energy and energy conservation and emission reduction are of great significance to solve the serious environmental pollution problem and resource depletion problem in today's world. With the improvement of the living standards of the Chinese people and the consideration of the national energy security strategy, investment in new energy and environmental protection technologies has given birth to huge opportunities.

Focus on new energy development, operation or supporting enterprises with commercial value, as well as enterprises with leading technology and clear and sustainable profit models in the fields of energy conservation, emission reduction and clean technology. Focus on the layout of new energy core tracks such as new energy vehicles, photovoltaics, wind power, and nuclear power.

(2) Equity investment in mergers and acquisitions

Achieve post-investment value-added by assisting listed companies in strategic planning, capital operation, acquisition and restructuring, and improving corporate governance; Promote the mergers and acquisitions and restructuring of listed companies and investment institutions VC and PE investment targets.

Please explain a clear investment logic and strategy, as well as a mature trading system (important)

Risk control measures

Risk identification, risk assessment, risk response, risk reporting and monitoring, and evaluation of risk management systems are the main links in risk management. Each link shall be interrelated, mutually influencing, and circularly interacting, and shall be updated and improved in a timely manner according to changes in internal and external factors such as the internal environment, market environment, and regulatory environment.

Risk identification covers all aspects of fund operation and covers all risk types. Fund managers shall conduct regular reviews of identified risks and timely understand and study new regulations, new businesses, new projects, new financial instruments, etc.

1. Risk prevention measures in advance for project investment

(1) Due diligence is conducted in the form of a project team;

(2) Key members of the management team are directly involved in transaction negotiation and pricing;

(3) the opinions of industry experts must be consulted in due diligence and investment decisions;

(4) Hire accountants, lawyers, etc. to participate in due diligence when necessary;

(5) On the basis of full discussion, the investment decision of the project shall be voted and approved by the investment decision-making committee in accordance with the investment decision-making mechanism;

(6) After being voted and approved by the voting committee, the relevant documents and materials will be submitted to the Policy Review Committee for deliberation and form a resolution of the meeting;

(7) In the process of investment management, except for the directors and senior management personnel (if any) sent by the fund manager, the investment manager and the fund finance shall supervise the invested enterprises through dual channels.

2. Post-event risk control measures for project investment

(1) When signing an investment agreement with the investee target, the fund shall ensure that the fund has full participation in decision-making rights in the investee and stipulate the right to withdraw and realize the fund by setting up safeguard clauses, including but not limited to preferential income distribution, anti-dilution clauses, resale rights, preferential liquidation rights, joint sale rights, performance adjustments, etc.

(2) Important personnel arrangements, foreign investment, external guarantees of special voting rights, and proposing the replacement of management in the event of unfavorable operations;

(3) Appoint directors to the board of directors according to the investment agreement, and have sufficient influence on the development of the enterprise;

(4) Allocate special personnel to regularly track internal and external information such as the industry dynamics of the investment target and the operation of the enterprise, and effectively implement risk control in the post-investment link. If it is found that the market changes too much, the trend is downward, or there are major business changes, and the profit is greatly reduced, the exit procedure will be initiated in time to prevent investment risks.

3. In the process of risk identification, the fund manager sorts out and evaluates the business process, establishes corresponding control measures for the main risk points in the business process, clarifies the corresponding control personnel, and continuously improves the business process.

4. Fund managers adopt a combination of quantitative and qualitative methods to conduct risk assessment, maintain the consistency of evaluation methods, and coordinate the relationship between overall risks and individual risks, long-term risks and short- and medium-term risks.

5. The fund manager shall regularly evaluate the risk management system, analyze, inspect, evaluate and revise the safety, rationality, applicability and cost and benefit of the risk management system to improve the effectiveness of risk management, and adjust, supplement, improve or rebuild according to the inspection results, changes in the external environment and the development of the company's new business.

Please elaborate on the post-investment management team and risk management mechanism.

Manage team situations

At least 3 core team members, including but not limited to graduation school, major, academic degree, time of joining the company, position, focus area, work experience, work performance, etc

Historical performance

Up to now, Anxin Qianhong management team has helped a number of target enterprises to complete A-share listing, such as: Huadian Heavy Industry, Xingshuaier, Huaming Equipment, Jimin Pharmaceutical, Hanbai Technology, Deepwater Haina, Zhuojin Environmental Protection (has passed the meeting, to be issued and listed), etc., among which Huaming Equipment and Hanbai Technology were awarded the top 10 of China's best high-end manufacturing industry M&A cases in 2015 by Investment Group.

Note: Based on the closing price on December 31, 2021, Microchip, Meiya Pacco, Deepwater Hainer and Zhuojin Environmental Protection IRR are calculated.

From the perspective of return on investment, many projects have successfully completed the exit and achieved good returns, for example: Anda Technology (Guizhou Anda Technology Energy Co., Ltd., code: 830809), a project exit through the New Third Board market making, the project return rate is 222%, and the annualized return is as high as 76%; The Xingshuaier project exited through IPO has a project return rate of 703% and an annualized return of 67%; All Huadian Heavy Industry projects that exited through IPO have been withdrawn, with a project return rate of 129% and an annualized return of 17%; The repurchase and exit projects include China Min E-commerce and Elite Zhitong, which have achieved annualized returns of more than 10%. In addition, projects that have not yet withdrawn but have been listed, such as Zhuojin Environmental Protection and Deepwater Haina projects, have returned about 35% and 31% respectively based on the current closing price.

1. Shanghai Huaming Electric Power Manufacturing Co., Ltd

Shanghai Huaming Power Equipment Manufacturing Co., Ltd. is a private high-tech enterprise engaged in the research and development, production and sales of high-voltage power equipment in substations, the first power transformer tap changer manufacturer in China and the second in the world, and the backbone enterprise of domestic power transformer tap changer and the main drafter of national standards in the industry.

Adhering to the concept of professional screening projects, Anxin Qianhong Investment pays close attention to growth and mature projects with continuous hematopoietic ability, and at the same time, with its own resources and professional capital operation advantages, it designs financing plans and capital operation plans for enterprises, and successfully leads the star project. This round of investment is jointly invested by SDIC Fund and Anxin Qianhong's Qianneng Fund of 805 million yuan, accounting for 35% of the equity of Huaming Power, of which 391 million yuan is invested by Qianneng Fund. After the investment, Anxin Qianhong actively sought M&A opportunities for listed companies, and at the same time gave full play to the professional advantages of investment banking to help enterprises complete capital operation, and in 2015, Huaming Power successfully completed its A-share listing through backdoor numerical control. This investment has won the top 10 M&A cases in China's high-end manufacturing industry in 2015. Up to now, the project has been listed and is gradually reducing its holdings and exiting.

2. Guizhou Anda Technology Energy Co., Ltd

Guizhou Anda Technology Energy Co., Ltd. is a new third board enterprise in the development, production and sales of iron phosphate and lithium iron phosphate products, and the iron phosphate products produced by the company are widely used in the domestic lithium iron phosphate power battery industry.

New energy and environmental protection, as the key focus of Anxin Qianhong investment, through years of investment research and practice accumulation, has professional project judgment ability in key areas. In view of the recognition of the project industry, the company's own development strength and the enterprise team, and the discovery of enterprise value, the investment of Chubb Technology project is 8.25 million yuan invested by the Qianxin Fund under Anxin Qianhong, and the project has been exited through the New Third Board market-making, with an annualized return of up to 76%.

3. Hangzhou Xingshuaier Electric Co., Ltd

The company is the backbone manufacturer of domestic refrigerator and freezer compressor thermal protector, starter and sealing terminal post, the company's products are mainly used in refrigerators, freezers, refrigeration water dispensers and other fields of refrigeration compressors and drying washing machines, has covered the main compressor manufacturers at home and abroad. The company has devoted itself to research and development in the field of thermal protectors for many years and has won a stable core customer base. Anxin Qianhong invested in the project in 2011, after the investment, Anxin Qianhong gave full play to the advantages of professional capital operation to help enterprises design capital operation plans, optimize capital structure, after years of development of the project itself, it was successfully listed on the Shenzhen Stock Exchange in April 2017.

4. Huadian Heavy Industry Co., Ltd

The company is a leading engineering system design and general contracting, EPC general contracting, equipment manufacturing and investment and operation coordinated development combination, is committed to providing customers with engineering system overall solution providers in material handling engineering, thermal energy engineering, industrial noise control engineering and offshore wind power engineering. With the company's strong R & D, design strength and manufacturing capabilities, the company has a leading industry position and high market share in traditional business, and at the same time, the company is the main compiler of a number of national standards and industry standards.

Adhering to the concept of professional screening project, Anxin Qianhong Investment invested in the project in 2011 in view of the outstanding investment highlights of the industry, enterprises and managers of the project, and the project was successfully listed on the Shanghai Stock Exchange in 2014.

Including but not limited to project name, stage, location, project introduction, investment amount, company valuation, investment ratio, exit, realized value, return on investment, internal rate of return, etc.

Reserve items

The detailed project reserve and its sources have been fully investigated in the early stage.

Help Jianye

Industrial development

1. Help Jianye develop the headquarters economy, and guide high-quality enterprises such as advanced manufacturing, chip design, and new energy to settle down in headquarters or sales companies through industrial fund investment.

2. Assist the construction of the financial center and new consumer business ecology of Jianye District, and improve the service system of "fund + entrepreneurial space + entrepreneurial counseling + financial services".

3. Anxin Qianhong shareholder Anxin Securities has 45 branches and 316 securities business departments in 26 provincial-level administrative regions, customer resources throughout the country, Anxin Securities' controlling shareholder Guo Investment is an A-share listed company, is a central enterprise listed financial holding platform with securities, trust, funds, futures, insurance and other licenses, and can provide rich capital support through a variety of characteristic financial products and financial means. Therefore, Anxin Qianhong can help the development of Jianye industry and enterprises through perfect financial service capabilities and extensive resource import capabilities.

4. Organize industrial exchanges and promote the healthy development of industrial ecology in Jianye District. Essence Securities has hosted the "Intelligent Manufacturing Power" forum, organized industry experts and well-known enterprises to conduct in-depth analysis of the development of intelligent manufacturing, looked forward to the future development trend, and promoted the ecological development of China's high-end manufacturing. Essence Securities has assisted SDIC Group, Dongguan Municipal People's Government, Songshan Lake Materials Laboratory and Huawei Technologies Co., Ltd. to jointly host the "Songshan Lake New Materials Summit Forum" to build a dialogue platform of "scientific research-industry-capital".

5. Empower post-investment enterprises and promote the accelerated development of high-quality enterprises in Jianye industry.

(1) Listing specifications

As a listing guidance broker, Essence Securities can provide professional listing standard consultation and services for post-investment enterprises, and many post-investment enterprises choose Essence Securities as a listing guidance broker.

(2) Help enterprises in Nanjing and Jianye District to introduce strategic investors

Essence Securities has strong investment and financing capabilities, and can use its influence to introduce strategic investors for post-investment enterprises or proposed investment enterprises. Taking the post-investment enterprise Haian Rubber Group Co., Ltd. as an example, after completing the due diligence of the project, the investment team of Essence Securities fully tapped the investment value of the enterprise, carried out good publicity for the enterprise, and helped Haian Rubber Group Co., Ltd. to obtain strategic investment from investors and core customers such as Hongta Innovation, Zijin Mining, Jiangxi Copper and XCMG Machinery.

(3) Financial support

In addition to equity investment funds, Essence Securities can use financial means such as national investment trust, securities, and insurance to fully provide financial support for post-investment enterprises in the form of financial leasing, equity pledge, etc.

（4）M&A and restructuring services

On the one hand, Essence Securities fully integrates the demands of all parties and recommends M&A and restructuring targets for post-investment enterprises; On the other hand, Essence Securities gives full play to the advantages of funds to provide fund raising services for mergers and acquisitions and restructuring for post-investment enterprises.

(5) Docking business resources

Since the establishment of Anxin Qianhong Actual Controller SDIC Group, it has always adhered to the strategy of serving the country, optimized the layout of state-owned capital, enhanced industrial competitiveness, and played the leading and leading role of state-owned capital in important industries and key fields. Through continuous innovation and exploration and structural adjustment, SDIC Group has formed three strategic business units in domestic and foreign markets: basic industry, strategic emerging industry, financial and service industry. The basic industry focuses on the development of energy industry dominated by electric power, transportation industry dominated by ports, railways, oil and gas pipelines, and strategic scarce mineral resources development business dominated by potash fertilizer. Through the "two-wheel linkage" of holding investment and fund investment, strategic emerging industries focus on the development of advanced manufacturing, new materials, bioenergy, health and pension, medicine and medical care, inspection and testing, intelligent technology, ecological environmental protection, engineering design and other industries.

Based on the basic industries and strategic emerging industries of SDIC Group, Essence Securities combines its own services with listed companies, local governments and business partners to provide a wide range of business cooperation opportunities for post-investment enterprises.

6. Promote the transformation of achievements in universities and scientific research institutes, and create a scientific and technological engine for the development of Jianye economy. Anxin Qianhong has maintained long-term close cooperation with high-quality universities and research units such as Tsinghua University, Chinese Academy of Sciences, Harbin Institute of Technology, Northwestern Polytechnical University, Donghua University, Central South University, etc., and can give full play to its resource advantages to help the incubation of Jianye science and technology enterprises.

Please elaborate on what kind of assistance it will bring to Jianye, including but not limited to fund manager settlement, project investment, talent introduction, project incubation, holding activities, etc.