The famous Chinese technology Ziguang Group announced the results of the chosen finance organization for Ziguang’s restructuring and bankruptcy process on Dec. 10. Alibaba offered a $200 billion bid on taking over Ziguang, which was rejected, as were proposals from other financial organizations.
The final decision went to the offers of Zhilu Capital and Jianguang Asset.
Ziguang Group is a high-tech company started by Tsinghua Unigroup in 1999. The company’s business is related to cloud computing, mobile Internet, big data processing, and other applications of the information technology industry. An industry-wide chain service provider integrates systems, such as research and development, construction, operation, and maintenance.
Why did a powerful corporation have to declare bankruptcy and reconstruction?
Since 2013, a series of mergers, acquisitions, and investments have resulted in a high debt-to-asset ratio of Ziguang Group. By June 2020, the total debt of Ziguang Group amounted to about $31.871 billion.
Ziguang Group has acquired Spreadtrum Communications, a U.S.-listed integrated circuit chip company, and RDA Microelectronics, an IoT chip company. They also bought 51% shareholder rights of “Xin H3C,” and own almost 100% shares of French micro-Linxens Company. In addition, Ziguang Group and its subsidiaries have successfully made Merging and Acquisition proposals to more than 20 companies and invested over $15 billion in just six years.
In addition, the Ziguang Group also invested in a large number of projects unrelated to its core business. For example, Ziguang Group invested about $440 million in Chengtai Insurance in 2018 and became a significant shareholder.
According to the “21st Century Business News” report, Alibaba did not win the auction due to many factors, including business layout, policy oversight, industry trends, and other shortcomings.
A chip industry analyst who did not wish to be named said Alibaba has relatively weak experience in the Chip industry, and maybe they would not manage it properly.
Besides Alibaba, there are two other qualified investors: Zhilu Capital and Jianguang Assets.
From public information, Zhilu Capital is an equity investment organization focused on semiconductor core technologies and other emerging high-end technologies.
On the other hand, Jianguang Assets is a private equity fund management company focused on investments and mergers in integrated circuits and emerging strategic industries.
According to the report, after identifying the strategic investor for the restructuring, the next step will be to dissect the Ziguang Group: sorting out business sectors and various sub-companies such as chips, cloud computing, and integrated circuits. Then they will be reorganized and merged accordingly.