Lao Qian from Foshan has also gone to Suzhou to invest in projects.

Recently, Midea Group has been in the spotlight. On one hand, it made it onto the hot search for "requiring employees to leave work at 6:20 p.m." On the other hand, it plans to repurchase shares worth 5 billion yuan in the secondary market, showcasing its "financial power." Now, this cash - rich home appliance giant has set its sights on the primary market and is managing a fund for the government.

Recently, Midea Capital, a subsidiary of Midea Group, jointly established an industrial investment fund focusing on hard technology with Suzhou Leading Industry Investment, with Midea Group serving as the fund manager. It is reported that this is Midea Group's first regional fund with market - oriented operation in the Yangtze River Delta.

According to official news, the new fund has completed registration. In the future, it will deeply explore high - growth projects in the Yangtze River Delta and mainly invest in hard - technology fields such as robotics and intelligent manufacturing, new energy vehicles, and semiconductors.

Suzhou is one of the most active state - owned limited partners (LPs) in the primary market. Suzhou Leading Industry Investment is a state - owned investment platform established by Suzhou High - speed Railway New City in 2019 and has been an LP for many institutions such as Yuanhe Zhongyuan, Suzhou Venture Capital, ICBC Investment, and Everse Capital under Temasek. Midea Group has more than 20 years of experience in equity investment and holds tens of billions of cash, making it a veritable "old - money fund." The joint establishment of the new fund by the two sides can be regarded as a combination of strengths.

Joining Hands with an "Old Friend" in Suzhou

The new fund is called the "Meike Zhizhen Fund," with a capital contribution of 310 million yuan. Despite its relatively small scale, it has an impressive background.

Equity penetration shows that among the seven contributors behind the Meike Zhizhen Fund, three are local state - owned enterprises in Suzhou, namely Kunshan High - tech Group, Kunshan Guoke Investment, and Suzhou Leading Industry Investment. The total contribution of the three accounts for as high as 37.1%.

Among them, Suzhou Leading Industry Investment is a state - owned investment platform established by Suzhou High - speed Railway New City in 2019 and has been an LP for many institutions such as Yuanhe Zhongyuan, Suzhou Venture Capital, ICBC Investment, and Everse Capital under Temasek.

As the protagonist of this cooperation, Midea Group contributed a total of 53.2% through four entities: Guangdong Midea Meishan Technology, Guangdong Yufan Enterprise Management, Midea Venture Capital, and Suzhou Wuzhong High - tech Meike Venture Capital Partnership. In addition, Zheshang Securities also participated in the contribution of the new fund, accounting for about 9.7%.

The cooperation between Midea and Suzhou this time is not surprising. As early as 2013, the vacuum cleaner industrial park of Midea Group's kitchen appliance division was established in the Suzhou - Xiangcheng Cooperation Zone, with a total investment of 500 million yuan, becoming one of the major investment promotion projects in the cooperation zone that year.

Since then, the cooperation between Midea and Suzhou has deepened. In November 2020, Suzhou High - tech Zone and Midea signed an agreement to establish a project of "three centers, two platforms, and one fund," focusing on fields such as industrial Internet, smart medical care, and comprehensive energy management.

The "one fund" in the cooperation agreement refers to the joint establishment of the "Midea Innovation Industry Fund" by the two sides, with an initial quota of 200 million yuan, to jointly invest in high - quality projects in the innovation field. That is to say, Suzhou and Midea already have a cooperation foundation in equity investment.

At the end of last year, Midea Capital also cooperated with Suzhou Wuzhong High - tech Industry Fund to establish a fund - Suzhou Wuzhong High - tech Meike Venture Capital Partnership. It is worth noting that this partnership is also one of the contributors to the new fund, accounting for as high as 19.4%.

As a former partner, it is reasonable for Midea to launch its first regional fund with market - oriented operation in the Yangtze River Delta in Suzhou.

Foshan's "Old - Money," More than 20 Years of Cross - Border Investment

The reason why Midea is called "old - money" is that it has quite rich experience in both direct investment and acting as an LP.

As early as 2000, Midea Group contributed to establish "Foshan Midea Air - Conditioning Industrial Investment Co., Ltd." Judging from the investment portfolio, the company mainly carried out strategic investments around the group's main business in the early stage, so most of its contributions were related to the air - conditioning manufacturing industry.

The turning point occurred in 2015. Realizing that the threshold of the home appliance industry was relatively low and "anyone with money could enter the competition," Midea set a new strategic goal - to transform from a traditional home appliance enterprise into an intelligent hardware company with Internet thinking.

Increasing the layout of equity investment is one of the important means for Midea to promote strategic transformation. In June 2018, Midea established a wholly - owned equity investment platform - Midea Venture Capital Management Company, namely Midea Capital.

Since then, the company has carried out investment activities through two entities, Midea Group and Midea Capital. In terms of investment direction, it has gradually expanded from the original smart home appliance - related fields to multiple cutting - edge fields such as integrated circuits, robotics, and medical devices.

According to CVSource data, as of now, Midea Group has made 60 contributions, invested in 47 enterprises, and 14 of the invested enterprises have successfully gone public. Midea Capital manages 18 funds, has made 55 direct investments, and has already achieved 7 IPO projects, including Yinghuate, Haopeng Technology, and Ruide Intelligence.

It is worth noting that in addition to direct investment, Midea is also an LP behind many institutions.

As early as 2016, Midea Group participated in the contribution of the mother fund under Hillhouse - "Beijing Yuanjing Changqing Equity Investment Center (Limited Partnership)." Currently, this fund has invested in many general partners (GPs) such as Plum Ventures, Linear Capital, GSR Ventures, Mingshi Capital, Blue Lake Capital, and Zhongding Capital, and has indirectly invested in star projects such as Li Auto and Niu Technologies.

In addition to the above - mentioned fund, Midea has also invested in 19 funds through the "Midea Group" entity. Its presence can be seen behind GPs such as Shunwei, Sequoia, CICC, and Guosheng Capital.

Midea Capital, the CVC platform under Midea, jointly contributed to the "Zhuhai Hillhouse Zhizhen Equity Investment Partnership" managed by Hillhouse in 2018. This fund is mainly used for the non - controlling acquisition of Yiheda, a developer of automation components.

"With More Than 320 Billion Yuan in Cash on the Books"

Whether acting as an LP or a GP, Midea is undoubtedly a powerful player eagerly awaited in the primary market.

The company's financial report in 2024 shows that Midea's total operating revenue was 409.1 billion yuan, a year - on - year increase of 9.5%, and its net profit was 38.5 billion yuan, a year - on - year increase of 14.3%, both hitting record highs. The cash flow was as high as 60.51 billion yuan.

Even more astonishing is that Fang Hongbo, the chairman of Midea, mentioned in an interview with "LatePost" recently that "Midea's current cash conversion cycle is - 9 days, and there is still 320 billion yuan in cash on the books."

In the primary market, abundant available funds represent the ability to make continuous contributions. In the current difficult fundraising environment, Midea is undoubtedly the most desirable market - oriented LP for many VC/PE institutions. On the other hand, as an industrial giant that has been established for half a century and has a market value of over 560 billion yuan, Midea's rich project reserves and industrial resources are also highly valued and favored by LPs in the primary market.

I remember when communicating with the person - in - charge of a government - guided fund in a southern city before, the other party clearly stated that when selecting fund managers, industrial investment would definitely be prioritized over financial investment institutions. In his opinion, compared with financial investment institutions, industrial capital has stronger control over the invested enterprises and is better able to fulfill the task of reinvestment, which is exactly what local state - owned assets value most.

If we evaluate Midea based on this standard, it is undoubtedly a perfect fit. Take the new fund cooperated with Suzhou this time as an example. In the investment direction of the new fund, the robotics track is placed in an important position. This may seem to have a certain distance from Midea's traditional air - conditioning business, but in fact, as early as 2015, Midea began to test the waters in the robotics track through forms such as investment and mergers and acquisitions.

In August 2015, Midea first established two joint - venture robot companies with Japan's Yaskawa Electric. At the beginning of 2016, it invested 178 million yuan to participate in a Chinese industrial robot enterprise, obtaining 17.8% of its equity. In 2017, Midea further acquired KUKA, one of the world's four major industrial robot enterprises. Currently, KUKA has established a fully automated production line for robots to produce robots, which can operate 24 hours a day, and can produce a robot every 30 minutes on average.

Through these strategic layouts, Midea now owns brands such as KUKA, Swisslog, Delta Tau, and Jiya Precision Machinery, and its products cover the entire industrial chain from core components to complete machines, from hardware equipment to systems.

In addition to robotics, new energy vehicles and integrated circuits have also been the focus of Midea's investment layout in the past few years.

In the field of new energy vehicles, Midea Group established Weiling Automotive Components Company in 2018, with its main business covering three fields: vehicle thermal management, electric drive, and chassis execution systems. From 2020 to 2021, Midea Capital successively invested in Juyi Technology, a company focusing on core components of new energy vehicles, and Haopeng Technology, a lithium - ion battery and power supply company.

In terms of integrated circuits, Midea has successively invested in Ruili Integrated, an integrated circuit developer, and Xinneng Semiconductor, which focuses on IGBT chips. In addition to investment, Midea also develops its own chips. It is reported that subsidiaries such as Meiren Semiconductor and Meiken Semiconductor under the company have achieved large - scale shipments in the fields of MCU (microcontroller) and IPM modules respectively. It is foreseeable that Midea will, as a GP in the future, gain more favor from LPs and local state - owned assets in the above - mentioned fields.

This article is from the WeChat public account "LP Spectrum," author: Wang Manhua, published by 36Kr with authorization.