The country's first M&A technology innovation bond has been launched

Since the beginning of this year, against the backdrop of policy guidance to foster "patient capital," the overall sentiment in the primary market has continued to rise, with both fundraising and investment activities recovering in tandem.

Many GPs have begun to expand their financing channels, actively entering the bond market in addition to fundraising from traditional LPs. Against this backdrop, another innovative sci-tech innovation bond has been officially launched.

The Nation's First! Sci-Tech Innovation M&A Bond Lands on the Beijing Stock Exchange

The listing bell rings at the Beijing Stock Exchange.

On July 14, Wuxi Xishan Financial Investment Group's 2026 Private Placement of Sci-Tech Innovation Corporate Bonds (For M&A) (Phase I) targeted professional investors was successfully issued. The bond has a size of 200 million yuan, a term of 3 years, and a coupon rate as low as 2.2%, setting a new record low in the issuer's historical bond issuance rates.

It is understood that this bond is not only among the first batch of private placement corporate bonds on the Beijing Stock Exchange, but also the first private placement M&A sci-tech innovation corporate bond on the BSE. The raised funds will be specifically used to acquire Honghui New Materials, a local listed new materials enterprise, using low-cost medium- and long-term bond funds to reduce the comprehensive financing cost of industrial M&A and complete the financial closed-loop of industrial integration.

In fact, since the official launch of the "Sci-Tech Board" in the bond market in 2025, an increasing number of GPs have regarded sci-tech innovation bonds as a key tool for market-oriented financing. This year, the issuance pace of sci-tech innovation bonds by venture capital institutions has further accelerated, and the use of proceeds has continuously expanded, from fund establishment and direct project investment to the current industrial M&A.

Looking at the first half of this year, Innoangel Capital, CAS Star, Wuxi Venture Capital, Suzhou Venture Capital, Xiangjiang State Investment, Jinpu Investment, Guangkai Fund Group and many other institutions have successfully issued sci-tech innovation bonds.

In March 2026, Innoangel Capital successfully issued a 300 million yuan sci-tech innovation bond with a 5+5 year fixed rate structure, a coupon rate of 2.45%, and an oversubscription ratio as high as 2.17 times, reflecting strong investor enthusiasm.

On April 10, CAS Star issued the nation's first hard-tech supporting corporate bond on the Shanghai Stock Exchange — "26 Chuangxing K1", with a size of 200 million yuan, a term of 5 years, and a coupon rate of 2.60%, with Kaiyuan Securities serving as the lead underwriter. The raised funds will mainly support the investment and incubation of high-growth potential projects in the new-generation hard-tech sector through fund contributions.

In June 2026, Wuxi Venture Capital under Guolian Group issued the nation's first "5+X" future industry sci-tech innovation bond on the SSE, with a size of 500 million yuan and a term of 5+5 years, focusing on the main track of future industries to match the long-cycle investment characteristics of hard tech.

Earlier, in October 2025, Zhongguancun Capital issued the first medium- and long-term sci-tech innovation bond on the BSE, with a size of 500 million yuan and a rate of 2.29%, setting a low for bonds of the same term and rating, firing the first shot of GP sci-tech innovation bonds on the BSE.

In terms of fund usage, the vast majority of sci-tech innovation bonds are used for capital commitments to new funds, additional fundraising for existing funds, and direct investment in sci-tech projects. However, this sci-tech innovation M&A bond from Xishan Financial Investment is used for equity acquisition of listed companies and industrial chain integration, filling the market gap of M&A-focused sci-tech innovation bonds on the BSE.

GPs Flock to Open Up a Second Fundraising Channel

Looking back at the market's development history, sci-tech innovation bonds are not a new product.

As early as 2017, the market piloted the "Innovation and Entrepreneurship Bond" to serve innovative enterprises and venture capital institutions. In May 2025, the People's Bank of China and the China Securities Regulatory Commission jointly issued a policy to launch the "Sci-Tech Board" in the bond market, officially including equity investment GPs as legal issuers of sci-tech innovation bonds, with supporting exclusive rating rules and risk-sharing tools.

After the policy was implemented, the bond issuance scale of financial institutions, tech-based enterprises, and private equity institutions rose rapidly. According to Wind data, in 2025, a total of 843 issuers in China's bond market issued 2132 sci-tech innovation bonds, raising approximately 2.3 trillion yuan, a significant increase from the 394 issuers, 1229 bonds, and 1.2 trillion yuan in the same period of the previous year. Among them, there were 638 tech-based enterprises raising about 1.8 trillion yuan; 124 financial institutions raising about 380 billion yuan; and 81 equity investment institutions raising about 74 billion yuan.

Reviewing issuance cases in the past two years, venture capital GP sci-tech innovation bonds have formed two issuance peaks:

In 2025, the first batch of leading GPs completed centralized registration and issuance. In June 2025, 5 leading venture capital institutions including CAS Star, Legend Capital, Oriental Fortune Hai, Yida Capital, and Jinyu Maowu were the first to obtain registration approvals, with a total registered quota of 1.35 billion yuan. These bonds generally came with credit enhancement guarantees, with terms extended to 5-10 years; Oriental Fortune Hai's coupon rate was as low as 1.85%, setting a benchmark for low-cost financing by private venture capital firms.

Half a year later, the second batch of GP sci-tech innovation bonds was launched. 4 institutions including Jishi Capital, Cowin Capital, Shengjing Jiacheng, and Daohe Long-term obtained a total approved quota of 930 million yuan.

Among them, Jishi Capital's "25 Jishi Capital PPN001" has a size of 400 million yuan, adopting a "5+3+2 year" ultra-long-term structure, with an issuer rating of AA+ and a bond rating of AAA, and a coupon rate of only 2.1%; Shengjing Jiacheng's 200 million yuan bond has a "5+5 year" term, using the China Bond Credit Enhancement risk-sharing tool for credit enhancement with supporting equity counter-guarantees; Daohe Long-term's 30 million yuan bond has a AAA issuer rating and a fixed rate of 2.2%; Cowin Capital obtained a 500 million yuan registration quota to be issued in installments within two years.

For the equity investment market, the product design of sci-tech innovation bonds highly matches the capital needs of the industry. On the one hand, sci-tech innovation bonds help ease fundraising pressure. Currently, equity fundraising in the primary market is seeing structural recovery overall, but capital resources are highly concentrated in leading institutions and popular hard-tech tracks, and most GPs objectively have the need to expand financing channels. For GPs, relying solely on institutional LPs and industrial capital for fundraising results in unstable capital sources, with fundraising cycles often as long as one or two years. Sci-tech innovation bonds provide a market-oriented direct financing path: issuing bonds to institutional investors such as banks, wealth management subsidiaries, and insurance companies, without being constrained by traditional capital providers, leading to more efficient capital arrival. In addition, sci-tech innovation bonds can be designed with terms of 5 years or more, matching the cycle of venture capital funds and avoiding the risk of short-term bonds being used for long-term investments.

On the other hand, the policy dividends are prominent. Sci-tech innovation bonds usually enjoy policy support, with lower issuance rates than ordinary bonds, significantly shortened approval cycles compared to ordinary bonds, and strong tax subsidies; the use of funds is also more flexible, allowing direct investment, investment in funds, and the establishment of incubation platforms, as well as designing related products through equity-bond linkage to diversify risks.

Moreover, issuing sci-tech innovation bonds can strengthen the institution's sci-tech brand endorsement, making it easier to connect with high-quality LPs such as government guidance funds and industrial capital, while deepening industrial ties with local parks and sci-tech enterprises, expanding project reserves and exit channels.

However, structural contradictions still exist in the market. On the one hand, issuers are highly concentrated. State-owned enterprises account for 97%, while private institutions account for less than 3%. Although this has improved after the new "Sci-Tech Board" policy, the financing cost for private enterprises is still significantly higher than that of state-owned enterprises; on the other hand, there is a mismatch between risk and pricing. Since 2025, the interest rate of 5-year AAA sci-tech innovation bonds has exceeded that of ordinary corporate bonds, mainly due to the surge in supply caused by policy expansion, liquidity discounts, and real risk premiums.

The value of sci-tech innovation bonds in alleviating the "fundraising difficulty" of the venture capital industry is beyond doubt, but balancing policy dividends and market realities remains a key challenge.

Conclusion

In an environment where equity fundraising is difficult to recover in the short term, sci-tech innovation bonds are becoming an indispensable second capital channel for primary market GPs.

On one hand, low-cost, long-term bond capital is continuously flowing into hard-tech investment; on the other hand, bond products are tailored to the real business scenarios of venture capital. This innovative financial tool is reshaping the capital structure of RMB venture capital institutions.

Nevertheless, structural contradictions still exist, which need to be resolved in the future by expanding the supply of long-term bonds, improving risk-sharing mechanisms, and enhancing secondary market liquidity.

This article is from the WeChat Official Account "FOFWEEKLY", written by Huang Rong, and published with authorization from 36Kr.