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A tens-billion-level tender offer event has occurred in the capital market, and the target company is ST Xinchao (600777). After being suspended for one trading day, ST Xinchao announced that the major event involved the company's shareholder Beijing Huineng Haitou New Energy Development Co., Ltd. (hereinafter referred to as "Huineng Haitou", the acquirer) intends to make a tender offer for 46% of the company's equity at a price of up to 9.698 billion yuan. The company's stock has been resumed since August 26. It should be pointed out that there are reports that Huineng Haitou has not truthfully reported and disclosed the persons acting in concert and the actual shareholding situation, and there is suspicion of illegal and irregular activities. Although this situation has been denied by Huineng Haitou, it is worth noting that since the fourth quarter of 2023, ST Xinchao has been concentratedly absorbed by four parties including Huineng Haitou, and they have all become the top five shareholders of listed companies, and their shareholding ratios are consistently close to the 5% holding line. Behind the tens-billion-dollar offer, is it an ordinary acquisition or a long-planned "dark market" that requires supervision and verification by listed companies.

Guo Jinshu aims for control

After becoming the major shareholder of ST Xinchao, Huineng Haito plans to acquire the listed company through a tender offer. The actual controllers behind Huineng Haito, Guo Jinshu and Guo Jianjun, father and son, are aiming for the controlling rights of the listed company.

According to the tender offer report disclosed by ST Xinchao, Huineng Haitou has issued a partial tender offer to all shareholders of ST Xinchao except itself, with the number of shares to be acquired being 3.128 billion shares, accounting for 46% of the total share capital of the listed company, and the offer price being 3.1 yuan per share. Based on the offer price, the maximum total amount of funds required for this tender offer is 9.698 billion yuan.

As the acquirer of this tender offer, Huineng Haitou has deposited 1.94 billion yuan (no less than 20% of the maximum total amount of funds required for this tender offer) into the designated account of China Securities Depository and Clearing Corporation Shanghai Branch before the announcement of the tender offer report as the performance bond for this tender offer. Judging from the price of this offer, the premium is not small. In the secondary market, as of the close of August 21, the share price of ST Xinchao was 1.84 yuan per share, and the offer price of 3.1 yuan per share was nearly 70% higher than the closing price.

It should be pointed out that the acquirer of this tender offer, Huineng Haitou, is also relatively well-known. Its actual controllers are Guo Jinshu and his son Guo Jianjun, among whom Guo Jinshu is known as the "coal king" of Inner Mongolia.

Penetrating the equity relationship, Huineng Haitou is 100% controlled by Huineng Holding Group Co., Ltd. (hereinafter referred to as "Huineng Group"), while Guo Jinshu directly holds 28.99% of the shares of Huineng Group. Guo Jianjun, the son of Guo Jinshu, indirectly controls 29.53% of the shares of Huineng Group through Beijing Huayuan Jiaxin Investment Co., Ltd. and Ordos Huayuan Jiaxin Trading Co., Ltd., and Huineng Group is jointly controlled by the two. Therefore, Huineng Haitou is jointly controlled by Guo Jinshu and Guo Jianjun, that is, the actual controllers of Huineng Haitou are Guo Jinshu and Guo Jianjun.

According to information disclosed by ST Xinchao, Guo Jinshu was born in 1951 and his correspondence address is in Dongsheng District, Ordos City, Inner Mongolia. Guo Jianjun was born in 1973 and his correspondence address is in Courtyard 5, Fenghuangzui Street, Fengtai District, Beijing. In addition to Guo Jinshu and Guo Jianjun, Guo Jinshu's daughter Guo Lifang and Guo Jianjun's children Guo Baichen and Guo Yushu all hold some shares in Huineng Group. Since the above three people hold a relatively low proportion of shares in Huineng Haitou, they are not identified as the actual controllers of Huineng Haitou, but are the persons acting in concert with the actual controller of Huineng Haitou.

It is understood that Huineng Group is a well-known enterprise in the market. The group's official website shows that the company was established in 2001, with 70 branches and subsidiaries, total assets of 135 billion yuan, and 16,000 employees. It is a large-scale joint-stock private enterprise with coal, electricity, and chemical industry as its main industries, new energy, new materials, and modern coal chemical industry as its new development direction, integrating logistics, finance, real estate, roads and bridges, water affairs and other industries. The company has now formed a production capacity of 50 million tons of coal, 1.53 million kilowatts of electricity, and 1.6 billion cubic meters of coal-to-gas and liquefaction; in addition, 35.4 million tons/year of coal, 2.6 million tons/year of new materials, 1.32 million kilowatts of thermal power, 1.1 million kilowatts of photovoltaics, and 70,000 tons of aluminum-silicon alloy production capacity are under construction. In 2023, the group will achieve sales of 68.2 billion yuan including tax and pay 13.57 billion yuan in taxes and fees. It ranks 240th among the top 500 private enterprises in China, 22nd among the top 50 coal enterprises in China, and 3rd among the top 100 private enterprises in the autonomous region.

Regarding the purpose of this tender offer, Huineng Haito also bluntly stated that it intends to further increase its shareholding ratio in the listed company through this tender offer, enhance the stability of the listed company's equity structure, and obtain control of the listed company.

Four parties have concentrated on raising funds

It is worth mentioning that in this tender offer, ST Xinchao disclosed a special risk warning, saying that the company had recently received complaints and reports from investors, claiming that Huineng Haito had not truthfully reported the disclosure of its joint actors and actual shareholdings, and was suspected of violating laws and regulations, and provided relevant evidence.

ST Xinchao said that the company's board of directors has begun to investigate and verify the acquirer's qualifications, credit status and acquisition intentions in accordance with Article 32 of the "Management Measures for the Acquisition of Listed Companies". The board of directors has made written inquiries to the acquirer and asked the acquirer to explain the matters involved in the report. The acquirer informed the company via email on the evening of August 22 that "except for the disclosed situation, there is no other person acting in concert holding the equity of your company."

Although the reported matter was denied by Huineng Haito, there is a very questionable aspect to the shareholdings of ST Xinchao's shareholders.

A reporter from Beijing Business Daily noticed that in the fourth quarter of 2023 and the first quarter of 2024, there was a consistent accumulation of funds by four parties of ST Xinchao. In addition to Huineng Haito, there were three new funds, including Beijing Shengbang Kehua Trading Co., Ltd. (hereinafter referred to as "Shengbang Kehua"), Inner Mongolia Bernacheng Private Equity Fund Management Co., Ltd.-Bernacheng Xinmaohuishi No. 1 Private Equity Securities Investment Fund, and Inner Mongolia Fanhai Investment Management Co., Ltd.-Fanhai Huixiang Long-term Value Private Equity Securities Investment Fund.

In terms of shareholding ratio, ST Xinchao has no actual controller, and the company's shareholders hold dispersed shares. The largest shareholder is Ningbo Guojin Sunshine Equity Investment Center (Limited Partnership), with a shareholding ratio of 6.39%. The second largest shareholder is Huineng Haitou, which currently holds a shareholding ratio of 4.99%.

As of the end of the first quarter of this year, Shengbang Kehua, Inner Mongolia Bernacheng Private Equity Fund Management Co., Ltd.-Bernacheng Xinmao Huishi No. 1 Private Equity Securities Investment Fund, and Inner Mongolia Fanhai Investment Management Co., Ltd.-Fanhai Huixiang Long-term Value Private Equity Securities Investment Fund held 5.51%, 4.98%, and 4.39% of the shares respectively, making them the third, fourth, and fifth largest shareholders of ST Xinchao.

It is not difficult to see that among the above four parties, only Shengbang Kehua holds more than 5% of the shares, and the shares of listed companies held by the company are auctioned. The remaining Huineng Haitou, Inner Mongolia Bernacheng Private Equity Fund Management Co., Ltd.-Bernacheng Xinmao Huishi No. 1 Private Equity Securities Investment Fund, Inner Mongolia Fanhai Investment Management Co., Ltd.-Fanhai Huixiang Long-term Value Private Equity Securities Investment Fund all hold shares above the 5% mark, and two of them are from Inner Mongolia.

Investment and financing expert Xu Xiaoheng told the Beijing Business Daily that increasing holdings in a listed company to 5% will constitute a takeover, which generally may stimulate a sharp rise in the secondary market share price of the listed company. In addition, after constituting a takeover, the party increasing holdings needs to disclose in detail the simplified and detailed equity reports.

The three-party funds and the acquirer concentrated on buying shares of the listed company, and the shareholding ratio was kept below the 5% mark, which inevitably caused the market to question whether the tender offer was compliant. Economist Song Qinghui also pointed out to the Beijing Business Daily reporter that if there is a relationship between the acquirer and the shareholders of the listed company, the shareholding is kept below the 5% mark, which can lower the price of the subsequent tender offer. However, whether there is a real relationship still needs to be verified by regulators and companies.

It should be pointed out that in response to the reported matters, the Shanghai Stock Exchange has issued a regulatory work letter to ST Xinchao and Huineng Haitou, requiring Huineng Haitou to verify and explain item by item in accordance with the relevant provisions of the "Management Measures for the Acquisition of Listed Companies" whether Huineng Haitou and related shareholders constitute persons acting in concert, and whether Huineng Haitou is in a situation where it is not allowed to acquire a listed company. In response to the relevant issues, a Beijing Business Daily reporter called ST Xinchao for an interview, but no one answered the phone.

Beijing Business Daily reporter Ma Huanhuan