15 billion RMB, the M&A fund of funds has been officially launched

Since the start of this year, the M&A boom has remained unabated, with policies supporting mergers and acquisitions intensively introduced from the central to local levels.

Meanwhile, regional industrial M&A funds are emerging at an accelerated pace across many parts of the country, with a scale that cannot be underestimated. Recently, another M&A fund, Henan Provincial M&A Mother Fund Partnership (Limited Partnership), has completed its establishment.

150 Billion Yuan! Henan Provincial M&A Mother Fund Established

According to data from the Qichacha APP, Henan Provincial M&A Mother Fund Partnership (Limited Partnership) was recently established with a total contribution of 150 billion yuan. Its business scope includes activities such as equity investment, investment management, and asset management through private equity funds.

The LP list is entirely composed of provincial state-owned enterprises in Henan: Zhongyuan Environmental Protection, Henan State-owned Capital Operation Group Co., Ltd., Henan Innovation Investment Group Co., Ltd., China Pingmei Shenma Holding Group Co., Ltd., Zhongyu Aviation Group Co., Ltd., Henan Provincial Railway Construction and Investment Group Co., Ltd., Henan Agricultural Investment Xingnong Investment Co., Ltd., Henan Zhongyu Industrial Investment Group Co., Ltd., Zhengzhou Guochuang Industrial Investment Co., Ltd., Zhengzhou Zhengdong New District Dongchen Industrial Investment Partnership (Limited Partnership), Henan State-owned Capital Operation Group Private Equity Fund Management Co., Ltd., etc.

The term of existence of the mother fund is 15 years, calculated from the date of establishment of the partnership, including a 10-year investment period and a 5-year exit period. The term of existence can be extended by 2 years with the unanimous consent of the partners' meeting. The specific investment fields are determined in accordance with the "Key Investment Field List of Henan Provincial Government Investment Funds" compiled by the Provincial Development and Reform Commission in conjunction with the Provincial Department of Finance and the provincial industry competent authorities. Exit methods include but are not limited to exit through public listing transfer of underlying assets, exit through listing for transfer, exit through agreement transfer, and exit through liquidation. The fund manager is Henan State-owned Capital Operation Group Private Equity Fund Management Co., Ltd.

For Henan, this is not the first M&A fund this year. As early as April, Henan Hongyu Industrial M&A Equity Investment Fund Partnership (Limited Partnership) with a scale of 500 million yuan was settled in Zhengzhou High-tech Zone, jointly funded by Henan Asset and Henan Provincial Equity Investment Fund Partnership (Limited Partnership), with Henan Asset acting as the main contributor.

With the continuous deepening of policy support resonating with the demand for industrial integration, a wave of M&A fund establishment is on the horizon. Beyond Henan, if we broaden our horizon, M&A funds are being rolled out across the whole country.

Among them, Shanghai has taken particularly frequent actions. In July, the "Jinpu Tianwei Energy Storage M&A Fund" with an initial scale of 500 million yuan was established, focusing on investment, M&A, incubation and cultivation, and capital operation of grid-side independent energy storage power station projects. In March, the first AIC industrial M&A fund in China was launched in Shanghai, with an initial scale of 57.02 billion yuan, focusing on the integrated circuit equipment sector to provide capital support for industrial M&A and restructuring, resource integration, and technology iteration. In February, Shanghai M&A Private Equity Investment Fund Phase III Partnership (Limited Partnership), jointly funded by Haitong Kaifa Investment, Haitong M&A Management Co., Ltd., and Changxin Bochuang, has a total scale of 900 million yuan, which promotes the restructuring and integration of state-owned enterprises, revitalizes stock resources, and strengthens market value management.

The contribution scale in Xiamen is even more noteworthy. On September 8, Xiamen State-owned Capital Company signed a series of cooperation agreements with China New Investment to jointly promote the implementation of the 200-billion-yuan dual 100-billion M&A fund system in Xiamen. In July, Xiamen Ruiyuan Times Phase II M&A Equity Investment Fund Partnership (Limited Partnership) had a total contribution of about 3 billion yuan, jointly funded by Xiamen Ruiting Investment Co., Ltd. controlled by Zeng Yuqun, Xiamen Jinrui Investment Partnership (Limited Partnership), and Xiamen Puquan Private Equity Fund Management Partnership (Limited Partnership).

In addition, the term of existence of M&A funds across various regions is also being extended. In August, Guizhou Jinhe Industrial M&A Equity Investment Fund with a total scale of 2 billion yuan has a term of 12 years. Through the "1+N" model, it initiates the establishment of sub-funds or special SPVs around the province's advantageous industries and strategic emerging industries, helping the transformation and upgrading of traditional industries and nurturing and expanding emerging industries. On July 17, Inner Mongolia Autonomous Region's first M&A fund "Mengqing Industry-Finance Investment M&A Equity Fund (Hohhot) Center (Limited Partnership)", led by the Hohhot Investment Promotion Bureau, has its term of existence extended to 15 years, with a total planned contribution of 1 billion yuan. The total raised scale of the mother and sub-funds is no less than 3 billion yuan, focusing on the cultivation of "six major industrial cluster" projects.

M&A Market Rebounds Strongly

Behind the intensive establishment of M&A funds is the structural change on the capital side of the primary market.

In the first half of the year, the investment volume and transaction value of private equity funds surged by nearly 2 times year on year, but the overall exit activities dropped by 9%. The capacity of IPOs is limited, but the exit demand of stock projects is rigid. M&A funds, especially those with state-owned capital background and industrial integration goals, are becoming new carriers for digesting stock assets, integrating production capacity, and competing for technological capabilities.

In 2026, the number of newly established M&A funds has increased significantly. On the one hand, the M&A and restructuring heat in the A-share market continues to rise, from the "strategic positioning" of leading enterprises to the "chain integration" of industrial leaders, the transaction frequency and level are improved; on the other hand, special M&A-themed funds and guidance funds are frequently established across the country.

At the same time, the enthusiasm of listed companies to participate in industrial M&A continues to rise. As of October 12, Wind data shows that since the beginning of this year, 3188 listed companies in the A-share market have disclosed the progress of M&A and restructuring.

Kerui Si plans to issue shares and pay cash to acquire 100% equity of Honggang Optoelectronics, Jin Aobo plans to acquire 80% equity of Huiwei Technology in cash to obtain controlling stake, Xiongsu Technology plans to acquire no more than 80% equity of Xinyuan New Materials in cash, Huasu Holdings plans to acquire 51% equity of Ningxia Junfeng New Energy for 23.7048 million yuan, Sanxia New Material plans to plan the acquisition of controlling stake of Saiwei Electronics......

According to observations from FOFWEEKLY, A-share M&A targets are concentrated in strategic emerging fields such as semiconductors, optical communications, high-end manufacturing, new energy, and new materials.

The policy signals are equally intensive. On September 28, eight departments including the People's Bank of China proposed in the jointly issued guidance opinions to "improve the financing system for investing in early-stage, small-sized, long-term, and hard technology enterprises", and support eligible service enterprises to carry out M&A and restructuring. On October 9, the "Opinions on Developing New Quality Productive Forces" issued by the Central Committee of the Communist Party of China and the State Council proposed to optimize the systems for M&A and restructuring of technology-based enterprises, equity incentives and other systems.

The M&A market is warming up significantly. Correspondingly, VC/PE institutions are also accelerating the development of M&A businesses, setting up M&A teams and establishing M&A funds. Changes in the recruitment market further confirm this judgment. Since the beginning of this year, many venture capital institutions have posted positions such as M&A managers, whose work content covers project mining and screening, due diligence and valuation, transaction structure design, and post-investment management, etc.

A series of intensive policy signals show that this year is expected to become a major year for the rise of a new wave of M&A funds.

Conclusion

From the introduction of a series of policies supporting industrial M&A to the successive implementation of M&A funds, China's M&A fund market is seeing frequent booms. In the future, with the entry of more patient capital and the continuous unblocking of exit channels, China's M&A market is expected to reach new heights.

This article is from the WeChat official account "FOFWEEKLY", authorized for release by 36Kr.