With a huge loss of nearly 10 billion yuan, GL Ventures cut its losses and exited the position.
The "No.1 PE" and the "investment myth" in the primary market also suffered a fiasco.
"Be a friend of time." This iconic line that resounds throughout the venture capital circle made GL Ventures and its founder Zhang Lei famous. In the early years, it became a legend with one successful battle, betting on Tencent and heavily investing in JD.com. GL Ventures has won countless "textbook-level" victories, making many VC/PE investors and entrepreneurs believe that "as long as a project or field is heavily favored by GL Ventures, it is a trend that the primary market will rush to chase at all costs."
What the outside world never expected is that a six-year, 15.841 billion yuan bet on Longi Green Energy, known as the "Moutai of the PV sector" in the A-share market, eventually turned into the most painful losing investment for GL Ventures in the past decade, with nearly 10 billion yuan vanishing into thin air. The top-tier capital in the venture capital circle that once chanted the concept of long-termism was almost trapped by time, and finally had no choice but to cut its positions at a loss and leave the market in a hurry.
I
The most painful investment defeat of GL Ventures in the past decade dates back to 2020.
At that time, the PV track was extremely hot, the carbon neutrality trend swept the entire capital market, VC/PE in the primary market fell into carnival, and securities firms and institutions in the secondary market bought in massively. At the peak of excitement, some people predicted that "global PV installed capacity will usher in an epic explosion."
At that time, Longi Green Energy was a super bull stock in the secondary market, with the world's number one wafer production capacity, and its position as the industry leader was unbreakable. Many investors compared Longi Green Energy with Moutai, calling the former the "Moutai of the PV sector". At the moment when the whole market was frantically bullish on PV, a major announcement of agreement transfer came out and shocked the capital market. Li Chunan, an important shareholder of the company, cashed out.
Li Chunan is one of the three founding veterans of Longi Green Energy, a native of Nanyang, Henan Province. He was admitted to the Department of Physics of Lanzhou University in 1986, and met two fellow townsmen and classmates Li Zhenguo and Zhong Baoshen, who were also from Henan, on campus. The three forged a deep friendship, which was also the starting point of Longi's business empire later. In 2000, Li Zhenguo founded the predecessor of Longi Green Energy, focusing on monocrystalline silicon materials.
Two years later, his Ukrainian order suffered setbacks, so he decided to invite his former classmate Li Chunan to take shares. Li Chunan is a "legendary figure". He invested 8.8 million yuan to increase capital and enter the company, and through a series of capital operations, he raised his shareholding ratio to 44%, surpassing Li Zhenguo to become the largest shareholder of Longi. In 2012, Longi Green Energy (formerly Longi Co., Ltd.) was listed on the A-share market, and Li Chunan held 24.08% of the shares, making him the largest natural person shareholder of the company.
Among the three founders, Li Chunan had the most ideas. He found that high-end slicing equipment was monopolized by overseas companies, and believed that this was an opportunity for domestic substitution. He then partnered with Zhong Baoshen to establish a new company, KINGDER CNC, which focused on tackling high-end slicing equipment, and naturally became a key supported enterprise of Longi. Li Chunan later took KINGDER CNC public on the Beijing Stock Exchange, and his personal wealth increased dramatically.
As his wealth grew, Li Chunan devoted his main energy to "researching investment" and "studying cycles". He believed that every industry has a cyclical peak, there is no "ever-victorious general" in the stock market, and one must know how to cash out at high points. In 2020, during the big bull market of PV, Longi's share price skyrocketed all the way, institutions were bullish and investors kept buying, but Li Chunan "went against the trend" and started large-scale reduction of holdings to realize his wealth.
In October 2020, he cashed out 3.43 billion yuan through centralized bidding reduction. Not satisfied with that, Li Chunan facilitated the most shocking investment in the primary and secondary markets that year. He brought in GL Ventures, the "No.1 PE", and transferred 226 million shares to GL Ventures through agreement transfer at a price of 70 yuan per share, with a total transaction value of 15.841 billion yuan. GL Ventures' move in the secondary market attracted a large number of media reports, creating a huge sensation.
The media focused all their attention on GL Ventures and Zhang Lei, and few people noticed Li Chunan. He landed on the Hurun Rich List with a total of nearly 20 billion yuan in cash from the two transactions and lived a relaxed life afterwards. Media in the venture capital circle were still staring at Zhang Lei, claiming that GL Ventures' investment in Longi would go down in history, and "GL Ventures, which is invincible in the primary market, will make a big success in the secondary market." In short, Zhang Lei was about to make a fortune.
II
"You may not have heard of Zhang Kun, but you must know Zhang Lei."
This is a popular meme from a social platform. In 2020, E-Fund Blue Chip Select surged by 95.09%, and Zhang Kun, the fund manager of E-Fund who heavily invested in Baijiu and Hong Kong-listed internet stocks, became suddenly famous, and he was regarded as a stock trading guru in the eyes of ordinary people. When Zhang Kun became popular, onlookers compared Zhang Kun with Zhang Lei, the well-known PE tycoon who had long been famous in the primary market, and the topic repeatedly hit the hot search lists.
In terms of popularity, Zhang Lei is more famous in the primary market. He is also from Henan Province, and was the top scorer in the liberal arts college entrance examination in Henan Province. In 1998, Zhang Lei went to Yale University for further study in the United States, where he met David Swensen, the "master of value investment", the mentor who changed his life. Zhang Lei learned the "orthodox long-term value investment philosophy". In 2005, Zhang Lei returned to China and founded GL Ventures, and since then he has been on a roll.
Also in 2005, a major event took place in China's internet industry. Tencent, which had been listed for just one year, encountered a crisis. Zhang Lei invested all his capital to buy the dip in Tencent, and became famous overnight with a 200x return. In 2010, Liu Qiangdong encountered a similar capital crisis as Tencent. He originally only wanted to raise 75 million yuan to meet an urgent need, but Zhang Lei directly put forward the condition, "Either I invest 300 million dollars in you, or I won't invest a cent." Liu Qiangdong was shocked, and he used GL Ventures' capital to build the logistics system, which reshaped the pattern of China's e-commerce industry.
These two investment cases alone pushed GL Ventures into the "first tier of Chinese PEs". After that, GL Ventures became a frequent participant in the primary market, a distinguished guest of high-quality projects. Looking back at the history of China's venture capital, after dollar funds entered the market, GL Ventures has more or less participated in the financing of most domestic super unicorns and star companies. According to incomplete statistics from venture capital platforms, about 130 to 150 companies that received investment from GL Ventures have gone public successfully.
Most of these 130 to 150 companies are super star IPOs. As a result, GL Ventures has long topped various venture capital rankings as the "No.1 PE". The corresponding "No.1 VC" is HSG. GL Ventures and HSG are also recognized as the "two giants" in the venture capital circle. Soon, GL Ventures became the "investment vane" of the primary market. Wherever GL Ventures invested, VC/PE and industrial capital would swarm in.
For a period of time, there was even a phenomenon in the primary market that "if GL Ventures hasn't invested in you, you are not a super unicorn." It is possible that the primary market really can no longer hold the leading GL Ventures. Or Zhang Lei's ambition expanded, he set his sights on the secondary market, wanting to "be friends of time" together with retail investors. He established HHLR (formerly GL Ventures China Value Fund) in the secondary market, which focuses on investing in listed companies. Among all its investments, Longi is the most well-known heavy position project of A-share old shares transferred through agreement, with the largest single investment amount.
After the transaction was completed, GL Ventures became the second largest shareholder of Longi. As soon as the news came out, Longi's share price opened 8.18% higher and then hit the daily limit directly, and the total market value of the company instantly exceeded 300 billion yuan. The market was almost unanimously cheering, saying "make a fortune together with GL Ventures".
III
However, the most fatal trap in the capital market is always hidden in the illusion that everyone is optimistic about.
After taking shares, GL Ventures became a long-term major shareholder of Longi. During the holding period, Longi successively launched two high-proportion share split schemes, the total share capital kept expanding, and the number of shares held by GL Ventures expanded from the initial 226 million shares to 444 million shares, with the shareholding ratio diluted to 5.5%.
At the peak of its holding, Longi's share price once reached 125 yuan per share. At that time, the floating profit of GL Ventures on this investment once exceeded 10 billion yuan. No one expected that the peak was just a flash in the pan, and what was waiting for GL Ventures afterwards was a multi-year long battle of falling share prices.
Zhang Lei was probably very confused, why is the secondary market completely different from the primary market? Over the years, GL Ventures received about 442 million yuan in cash dividends before tax from Longi. This return is negligible compared to the huge principal of 15.841 billion yuan. After the carnival came the storm-like inflection point of the PV track. The whole industry changed from shortage of supply to severe overcapacity, and prices plummeted.
Longi no longer tried to maintain a high valuation, and the 70-yuan shareholding cost line of GL Ventures had become an unreachable high point. Seeing the share price plummeting all the way, GL Ventures did not stop the loss and leave the market immediately. They believed in being friends with time, decided to wait and see, and bet that the PV cycle would bottom out and recover.
The reality was very bad. In the long years that followed, GL Ventures and Longi staged another episode that shocked the capital market. In the third quarter of 2023, Longi's financial report showed that HHLR's shareholding ratio quietly dropped from 5.85% to 4.98%, directly falling below the 5% "red line". If the shareholding ratio is lower than 5%, there is no need to issue a public announcement in advance for share reduction. In November 2023, the regulatory authority issued a case filing notice to HHLR. GL Ventures took remedial measures, repurchased all the relevant shares in full, and the shareholding ratio rose back above 5%, which put an end to this disturbance.
In 2025, GL Ventures figured it out, wanted to "break up" with time, and worked out a "textbook-level" escape plan. First step, announce the share reduction, precisely break below the 5% "red line", and get the pass for quiet position liquidation. Second step, reduce holdings silently for half a year, and speed up selling shares quietly. Third step, completely clear the position, and gradually disappear from the list of top ten shareholders. In the first quarter of 2026, HHLR no longer appeared in Longi's financial report. The shareholding threshold for the 10th largest shareholder in that period was about 0.53%, which means GL Ventures had basically cleared all its positions and left the market.
Time made GL Ventures pay a painful price. How much can it recover from the 15.841 billion yuan principal it invested at the beginning? According to the calculation of many institutions and media, the total cash recovered from successive share reductions is about 6 billion yuan, plus the 442 million yuan of dividend income over six years, the total book recovery is about 6.442 billion yuan. Subtract the recovered amount from the initial principal, the book loss of this investment is about 7.4 billion yuan. After adding the annualized capital opportunity cost of the fund over six years, the total comprehensive loss is nearly 10 billion yuan. GL Ventures suffered a huge loss after six years of investment.
After GL Ventures' large-scale withdrawal, Longi's situation became even more difficult. According to the latest semi-annual report of Longi Green Energy, the company's revenue in the first half of the year was 27.045 billion yuan, down 17.58% year on year; the net loss was 3.684 billion yuan, the net loss after deducting non-recurring gains and losses was 4.03 billion yuan, and the net cash flow generated from operating activities was -5.818 billion yuan. In addition to the failed investment in Longi, GL Ventures also did not get good returns from its investment in GREE Electric Appliances. Its bet on Dong Mingzhu fell into a quagmire. GL Ventures invested a huge sum of 41.6 billion yuan, including 21.85 billion yuan of its own capital and 20.83 billion yuan of leveraged capital from the syndicated M&A loan, with the loan repayment deadline at the end of December 2026.
In February 2026, GREE Electric Appliances issued a share reduction announcement. Zhuhai Mingjun, an entity under GL Ventures, planned to reduce its holdings by no more than 2% of the shares through block trading within three months, and the funds obtained from the reduction would be used to repay bank loans. Later, Zhuhai Mingjun completed the first large-scale share reduction, cashing out nearly 1.6 billion yuan. It is not easy for GL Ventures to completely get rid of the loss on its investment in GREE, which is essentially not a "successful investment". Does the concept of "be a friend of time" no longer work? The author believes that "be a friend of time" has not failed, the premise is that "time is willing to be your friend".
Losing nearly 10 billion yuan might have bankrupted other institutions, but GL Ventures has a large business scale so the impact is relatively limited. It can only be said that the gameplay of the primary market can hardly be completely replicated in the secondary market. Even the "stock god" Warren Buffett will lose money, and there is no "ever-victorious general" in the stock market.
This article is from the WeChat official account "Investor", author: Yun Fan, published with authorization from 36Kr.