China Launches First Batch of Hybrid Sci-Tech Innovation Bills to Boost Financial Support for Technology-Based Companies
On July 26, the first batch of 7 hybrid sci-tech innovation bills were issued in China, marking a significant step in further filling the gap in hybrid funds in the bond market. These bills aim to realize the spectral effect from bonds to stocks and expand the depth and breadth of sci-tech innovation financial services.
The China Interbank Market Dealers Association, under the guidance of the People’s Bank of China, has innovatively launched a hybrid fund to meet the needs of technology-based companies at different stages of development. These funds provide long-term, stable, mixed stocks, and debt funds for science and technology companies.
The completion of the issuance of the first batch of hybrid sci-tech innovation bills is expected to guide market institutions to invest in technology-based companies with equity investment thinking. It will strengthen financing support for technology-based companies in the seed stage, start-up stage, and growth stage, and provide additional income sources for investors.
The first batch of hybrid sci-tech innovation bills issued amounted to 2.2 billion yuan. Shanghai Lingang Economic Development (Group) Co., Ltd. actively participated in the issuance, utilizing the funds raised for equity investment and investment in technological innovation enterprises. By actively supporting the field of technological innovation, this move aims to accelerate the transformation of scientific and technological achievements and empower industrial transformation and upgrading.
The Shanghai Headquarters of the People’s Bank of China played an active role in promoting the launch of the hybrid sci-tech bills. The institution helped issuers sort out the underlying assets of sci-tech innovation, design options for equity conversion, and address practical difficulties such as insufficient funds for corporate equity.
Market participants believe that the hybrid sci-tech innovation bills will link bonds with investors’ future “equity transfers,” providing a new avenue for the conversion from debt investment to venture equity investment. This innovation allows industry and venture capital institutions to broaden funding sources, enrich exit methods, and improve turnover efficiency. It serves as a benchmarking practice for financial support for technology-based enterprises.
Sichuan Development (Holdings) Co., Ltd., one of the first batch of issuers, has successfully linked the bond interest rate of their hybrid sci-tech innovation bills to the valuation growth rate of an acquired pharmaceutical company. By accurately matching the demand for equity investment in the technological innovation field, the company successfully tested the waters of stocks and bonds to promote technological innovation.
Qian Lihong, general manager of the Investment Banking Department of China Construction Bank, sees this hybrid sci-tech innovation as a powerful tool in financial services. China Construction Bank plans to launch its own hybrid technology innovation bills in collaboration with Sichuan Development. The successful issuance of these bills reflects investor recognition of the product’s innovation and showcases the bond market’s enthusiasm for supporting technological innovation.
The issuance of the first batch of hybrid sci-tech innovation bills also further activates the innovative power of enterprises. By turning the issuers’ patents into a bonus, the bills effectively reduce financing costs and revitalize assets accumulated in the construction field. Companies like Hubei Road and Bridge Group Co., Ltd. see this financing structure as crucial to their development.
Industrial Bank acted as the lead underwriter in the issuance of these hybrid sci-tech notes. Lin Shu, general manager of the Investment Banking Department, stated that by effectively revitalizing customers’ existing patent rights, the bank has provided a successful case of domestic patent pledge bond financing, demonstrating the positive impact of financial support on technological innovation entities.
The issuance of hybrid sci-tech innovation bills also brings benefits to entities in the sci-tech innovation financial reform pilot zone. Companies like Nanjing Communications Construction Investment Holding (Group) Co., Ltd. now have a new path to support the whole life cycle financing of science and technology innovation. This move effectively solves the problem of investment funds for technology-based companies.
The Nanjing Science and Technology Innovation Financial Reform Pilot Zone, home to thousands of high-tech and technology-based small and medium-sized enterprises, sees the issuance of hybrid sci-tech innovation bills as an expansion of financing channels for sci-tech innovation enterprises. This move, which leverages the comparative advantages of various financial institutions, strengthens integration and linkage, and provides both equity and debt support, contributes to the realization of a virtuous circle of science and technology innovation-industry-finance.
Disclaimer: The Securities Times provides information for reference only and does not constitute substantive investment advice. Readers should exercise caution when making investment decisions.
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