15 Billion Yuan, Investors Flock to Henan to Raise Capital
A 15-billion-yuan M&A parent fund has landed in the Central Plains region.
Recently, Henan Zhongyuan M&A Equity Investment Fund Partnership (Limited Partnership) completed its filing at the Asset Management Association of China. It boasts a total scale of 150 billion yuan, with the first phase standing at 30 billion yuan and a duration of 15 years. The list of contributors includes three provincial state-owned capital operation platforms, four provincial leading industrial enterprises, state-owned entities of Zhengzhou City and Zhengdong New Area, as well as Zhongyuan Environmental Protection, an A-share listed company controlled by Zhengzhou municipal state-owned assets.
This means that funds from three tiers — provincial, municipal and industrial group — have been incorporated into the same limited partnership. The gathering on the capital side and the integration on the industrial side meet in Henan.
This filing seems to be nothing more than a fund completing legal procedures, but in fact it marks a logical shift for local state-owned assets to carry out mergers and acquisitions, as well as a proactive move by Henan on the industrial integration track.
For investors who travel around all year round, it means they will have one more destination on their schedule in the future. In the past, trips to Henan were mostly for visiting a manufacturing project or a consumer brand; but for subsequent trips to Henan, the topics to discuss may include sub-funds, management qualification and the target pool for industrial M&A.
The Birth of the 150-Billion-Yuan M&A Parent Fund
Let's first look at the fund itself.
The fund adopts a limited partnership system and follows the "parent-sub fund" model. It has a total scale of 150 billion yuan, with 30 billion yuan in place for the first phase, and an overall duration of 15 years, including a 10-year investment period and a 5-year exit period. With the unanimous consent of all partners, the period can be extended for a maximum of 2 more years. The fund manager is Henan State-owned Capital Operation Group Private Equity Fund Management Co., Ltd., which is affiliated to Henan Capital Group.
As the cornerstone contributor and manager, Henan Capital Group is the second provincial state-owned capital operation company in Henan. It was established in June 2022 with a registered capital of 15 billion yuan, and its total assets exceeded 100 billion yuan by the end of 2025.
The capital contribution structure has drawn wide attention. According to the previously public arrangement, the 150-billion-yuan subscribed capital is divided into three tiers.
The first tier is the provincial state-owned capital operation platforms. Henan Capital Group contributes 4.5 billion yuan, accounting for 30%, making it the single largest contributor and the cornerstone investor of the entire fund; Henan Investment Group contributes 3 billion yuan, accounting for 20%; Yuzhi Holding Group contributes 500 million yuan. The three parties contribute a total of 8 billion yuan, acting as the ballast stone of this fund.
The second tier is the provincial leading industrial enterprises. China Pingmei Shenma Group contributes 1 billion yuan, while Zhongyu Aviation Group, Henan Railway Construction Investment Group and Henan Agricultural Investment Group each contribute 500 million yuan. The four parties contribute a total of 2.5 billion yuan. The value of capital providers in this tier may not lie in the capital itself, but in the industry. The M&A fund ultimately needs to find targets, negotiate integration and dispatch teams in the industrial chain, so industrial groups are not only contributors, but also project sources and integration parties.
The third tier covers Zhengzhou City and Zhengdong New Area. Zhengzhou Guochuang Industrial Investment contributes 1.35 billion yuan, and Zhongyuan Environmental Protection contributes 1.35 billion yuan, each accounting for 9%; the state-owned capital related entities in Zhengdong New Area contribute 1.8 billion yuan, accounting for 12%. The three parties contribute a total of 4.5 billion yuan, accounting for 30% of the entire fund. It is worth mentioning that Zhongyuan Environmental Protection is an A-share listed company controlled by Zhengzhou municipal state-owned assets. It is not uncommon for listed companies to directly act as contributors to provincial M&A parent funds, which also leaves an interface for the subsequent "listed company + fund" M&A model.
From the perspective of governance structure, it basically matches the three-tier capital contribution structure. The investment decision committee has a total of 7 seats: the manager appoints 4 seats, Henan Innovation Investment Group appoints 1 seat, the four provincial leading industrial enterprises and Henan Zhongyu Industrial Investment Group jointly appoint 1 seat, and the state-owned entities of Zhengzhou and Zhengdong New Area jointly appoint 1 seat. In short, the manager holds the majority of decision-making power, and the industrial parties and municipal contributors each have their own say.
The subsequent implementation method is to set up three types of sub-funds: industrial M&A sub-funds, regional M&A sub-funds and special M&A sub-funds, which serve as the implementation carriers for project M&A and industrial integration. In the future, managers from central enterprises, listed companies and large industrial groups will be widely introduced, and social capital such as financial asset investment companies, asset management companies and insurance institutions will be leveraged.
That is to say, 150 billion yuan is the figure at the parent fund level, and the amount of capital that actually enters the project will be amplified.
There is also a system detail worthy of attention. In September 2025, the General Office of the Henan Provincial People's Government issued the Implementation Opinions on Promoting the High-quality Development of Government Investment Funds, which stipulates that in principle, government investment funds participate in shares but do not hold controlling stakes, and the cumulative investment in the same project shall not exceed 20% of the fund scale; but for M&A funds and special funds established to implement major strategies, this restriction can be lifted with the approval of the financial department. The most fundamental difference between venture capital and M&A lies in whether to take control, and this exception clause just reserves space for a parent fund that conducts holding-type industrial M&A.
Another official document can reveal the investment direction of this parent fund. In August this year, the Henan Provincial Development and Reform Commission, with the consent of the provincial government, issued the Key Investment Field List of Henan Provincial Government Investment Funds, covering four major sectors: emerging pillar industries, future industries, traditional advantageous industries and modern service industries, with a total of 78 subdivided fields. The cutting-edge directions include humanoid robots, general large models, full-chain hydrogen energy technology, biological breeding, quantum computing and 6G mobile communication.
Specifically for this M&A parent fund, the emerging industry directions include modern equipment, new energy and intelligent connected vehicles, green petrochemicals and new materials, new-generation information technology, biomedicine and health, low-altitude economy and aerospace; the future industry directions include embodied intelligence, hydrogen energy and new energy storage, biomanufacturing, quantum technology, new-generation information network, and cutting-edge new materials; the optimization and upgrading direction of traditional industries focuses on steel, coal, non-ferrous metals, food, building materials and construction.
For GPs, this list itself is also a ready-made project initiation reference book.
Why Henan?
Whether a fund can succeed is never a one-sided matter.
Institutions that are willing to put capital and teams in a province usually value not the immediate agreement on paper, but whether the place can continuously support the subsequent industrial implementation. The undertaking capacity demonstrated by Henan this time mainly comes from the superposition of two levels: the systematic layout on the capital side and the real scenarios on the industrial side. The two complement each other and are indispensable.
Let's first look at the capital side.
The role of local state-owned assets in such cooperation is no longer just the capital provider, but the builder of the fund cluster. The Implementation Opinions on Promoting the High-quality Development of Government Investment Funds released in September 2025 has given clear statements on several clauses that GPs care most about.
In terms of return investment, it requires that the proportion of return investment in Henan shall in principle be no less than the amount of government contribution, that is, 1 time, and can be appropriately reduced or cancelled according to the situation of the fund; the recognition standard is also very loose, and direct investment, indirect investment and guided investment in Henan's enterprises and projects are all counted.
The profit concession clause is written more directly: after the fund is liquidated, the financial department can make profit concessions to the management institution and other contributors according to the plan and performance results, with a maximum of 100% of the net income from the financial contribution. In terms of fault tolerance, the document clearly tolerates normal investment risks, does not take the profit and loss of a single project or a single year as the assessment basis, and the performance evaluation focuses on the overall performance of the fund, not targeting sub-funds or specific projects alone. The evaluation cycle for venture capital funds can also be extended.
1 time return investment, loose recognition standard, maximum 100% profit concession, and assessment based on the whole fund rather than a single project — these clauses together answer the most practical questions for an institution to settle in a province: "Can the return investment be achieved", "How much income can be retained", and "Who will bear the loss if the investment loses money".
When it comes to specific funds, the design is also very detailed. The Henan Provincial Angel Investment Guidance Parent Fund with a total scale of 3 billion yuan has a first phase of 1 billion yuan, and the entrusted management institution is Henan Investment Group. It has established a repurchase and profit concession mechanism for the first time: if the sub-fund is repurchased within 3 years after its establishment, the parent fund will transfer it at the original capital contribution amount; if it is repurchased within 3 to 5 years, it will be transferred at the original capital contribution amount plus the income calculated according to the 1-year LPR from the 4th year; if it is repurchased for more than 5 years, it will be priced in a market-oriented way. After the parent fund recovers all the paid-in capital, as long as the sub-fund meets the return investment requirements, the income obtained by the parent fund from investing in Henan projects will be transferred to the sub-fund management institution and other contributors.
At the urban level, Zhongyuan Science and Technology City in Zhengzhou has formed a considerable density. As of June 2025, more than 210 equity investment funds have gathered here, with a management scale of more than 1800 billion yuan, and more than 440 traditional financial institutions including banks, securities companies, futures companies, insurance institutions and financial leasing companies. The fund matrix is laid out by stage: at the forefront is the concept verification seed fund, whose manager is publicly selected across the country; at the angel stage, there is Henan's first market-oriented angel fund jointly established with Bangqin Capital; at the parent fund level, Zhongyuan Science and Technology Innovation Parent Fund is jointly initiated by Zhongyuan Science and Technology City Industrial Guidance Fund and Shenzhen Angel Investment Guidance Fund Management Co., Ltd.; at the venture capital and growth stage, Qianhai Fangzhou and Tongchuang Weiye have been introduced; at the industrial and strategic new stage, Zhengdong Strategic Emerging Fund has been established in cooperation with CICC Huirong.
Then look at the industrial side, which is another kind of resource that is more difficult to replicate.
After all, capital can flow, but scenarios are hard to move. And just this year, there is a sample that has just happened on the Central Plains land, which is worthy of investors' in-depth study.
Weiyuan Synthetic Biology is a synthetic biology enterprise established at the end of 2021. Reviewing its financing history, you will find a clear "Henan track": in May 2022, it completed an angel round of nearly 100 million yuan, with Huirong Fund under Henan Investment Group participating in the follow-up investment; in July 2023, it completed a Pre-A round of 100 million yuan, with Huirong Fund participating in the follow-up investment; in August 2024, it completed an A round of over 300 million yuan, with Huirong Fund continuing to increase its investment; in April 2026, it completed an A+ round of 300 million yuan, with Huirong Fund making another move. In four rounds of financing, Huirong Fund participated in every round, with a cumulative investment of several hundred million yuan.
This rhythm of accompanying the enterprise from the angel round is not common among government guidance funds. Generally speaking, government funds prefer mid-to-late stage projects with low risks and quick returns. Henan chose another way — bet on the source of technology and accompany the enterprise to grow up.
In May 2026, this long-term investment ushered in its next stage. Weiyuan Synthetic Biology completed a new round of financing of 1.5 billion yuan, in which the equity part was participated in by Zhang Qibin, Tan Ruiqing and Xingyin Investment, and the long-term loan was provided by the Beijing Branch of Industrial Bank. The funds are mainly used for the M&A of Yuxin Sugar Alcohol and the large-scale mass production of a number of bulk products.
The acquired Yuxin Sugar Alcohol is located in Anyang, Henan. It is the world's second largest xylitol producer, with an annual revenue of about 1 billion yuan and an annual profit of over 100 million yuan. After the completion of the M&A, only the controlling stake changes, and the original team and management remain unchanged. For Weiyuan Synthetic Biology, its "one-step fermentation" technology can produce products such as psicose and mannitol, with the cost reduced by more than 30% compared with the traditional chemical method, while Yuxin Sugar Alcohol provides ready-made production lines, fermentation facilities and customers. The technology side gets production capacity, and the production capacity side gets technology. This is a typical industrial chain integration.
The evaluation of this transaction by Henan Innovation Investment Group is: "This M&A is a key measure for Weiyuan Synthetic Biology to deepen the layout of the biomanufacturing industrial chain and accelerate the industrialization of synthetic biotechnology. It is also a model practice for Innovation Group to rely on regional comparative advantages to help technology-innovative enterprises evolve into industrial leaders and promote the quality upgrading of Henan's biomanufacturing industry."
The post-investment actions are equally specific. At present, Henan Innovation Group undertakes the management of Henan provincial government guidance funds with a scale of over 300 billion yuan. In this transaction, on the one hand, it cooperates with Henan Biotech Industry Group under Henan Investment Group to provide Weiyuan Synthetic Biology with pilot test bases and related services, so as to accelerate the pilot test verification and scaled production of multiple products; on the other hand, it assists the enterprise to carry out industrial cooperation dialogues with prefectural and municipal governments in multiple biomanufacturing advantageous regions in Henan. Anyang City has given strong support in this industrial implementation, and will continue to cooperate with prefectural and municipal governments to coordinate various resources such as capital, energy and policies for enterprises in the future.
Taking the whole situation into account from this transaction, we can get the simplest answer to "Why Henan". On the one hand, there is patient capital that accompanies the enterprise through four rounds of financing, and on the other hand, there are ready-made production capacity, scenarios and local supporting facilities. When both conditions are met, M&A funds have places to invest.
M&A is opening a new door
Shift your attention away from this single fund in Henan and look at the larger background, a new trend is taking shape.
For a long time, when talking about exit in the primary market, the default refers to IPO. After the project is invested, queuing, review, listing and share reduction is a path that has been repeatedly verified. M&A is placed in a secondary position, more like an alternative after failing to go public.
But in recent years, this "default" is changing.
In March 2026, the director of the National Development and Reform Commission announced at the economic-themed press conference of the Fourth Session of the 14th National People's Congress that the NDRC will work with the Ministry of Finance, the People's Bank of China and other departments to set up a national-level M&A fund, whose service target is venture capital. The goal is to unblock the exit channels of venture capital and improve the turnover efficiency of venture capital, which is expected to guide and leverage various funds with a scale of over 1 trillion yuan.
Local actions came even earlier.
Shanghai has released a state-owned M&A fund matrix of more than 500 billion yuan, with the goal of achieving an M&A transaction scale of over 300 billion yuan by 2027; Shenzhen plans to complete more than 200 M&A transactions with a total transaction value of over 100 billion yuan by 2027; Beijing's Jingguo Chuangzhi M&A Equity Investment Fund with a registered scale of 30 billion yuan has also been launched.
The market itself is also responding. According to Wind data, a total of 3602 M&A events were disclosed in China's M&A market in the first half of 2026, a year-on-year increase of 0.14%; the transaction scale was about 1092.5 billion yuan, a year-on-year increase of about 36.69%.
The pace on the audit side is also accelerating. According to Wind statistics, in the first three quarters of 2026, there were 34 M&A and restructuring projects of listed companies that went to the meeting, a year-on-year increase of 36%, of which 33 were approved, with a meeting approval rate of about 97%. The M&A and Restructuring Committee arranges about 4 meetings on average every month. By the end of September, the meetings of the Shanghai