This month, Henan and Tianjin successively introduced policy measures to support mergers and acquisitions. Since the release of the "Six Measures for Mergers and Acquisitions" (i.e. the "Opinions on Deepening the Reform of the Market for Mergers and Acquisitions of Listed Companies") in September last year, provinces (municipalities directly under the central government) such as Shanghai and Anhui, as well as cities such as Shenzhen, Wuxi, Nanjing, and Guangzhou, have successively issued support measures for mergers and acquisitions, aiming to further leverage the resource allocation function of mergers and acquisitions, enhance the competitive advantage of key industries, cultivate and develop new quality productivity, and enhance the ability of capital markets to serve the real economy. Experts interviewed believe that, driven by the "six points of mergers and acquisitions", local governments are further increasing their support, and the activity of mergers and acquisitions is expected to further increase. Next, the focus of mergers and acquisitions in the capital market will shift towards "technological reinforcement" to assist in industrial upgrading; Cross regional and cross-border mergers and acquisitions continue to rebound, strengthening resource integration; Financing tools are becoming more diversified, and merger and acquisition funds are expected to become trading hubs. On July 16th, the General Office of the People's Government of Henan Province publicly released the "Several Policy Measures to Support Mergers and Acquisitions of Listed Companies in Henan Province", which includes promoting high-quality industrial development, strengthening docking services, enhancing fund supply, and supporting enterprises to "go global". These measures aim to increase the intensity of mergers and acquisitions, improve the quality of listed companies, and enhance the ability of capital markets to serve the real economy. On July 17th, seven departments including Tianjin Local Financial Management Bureau, Tianjin Securities Regulatory Bureau, and Tianjin Finance Bureau jointly issued the "Several Measures to Support Mergers and Acquisitions in Tianjin", which introduced 13 specific measures from five aspects: promoting high-quality development, expanding financing channels, and improving service quality and efficiency. These measures aim to connect and optimize the key links of the merger and acquisition capital chain, target pool, and transaction services, fully activate the market resource allocation function, and help industrial transformation and upgrading and high-quality development. Currently, various regions are intensively introducing policies to support mergers and acquisitions, with the core being in line with the country's strategic orientation of 'serving the real economy through capital market reform'. ”Tian Lihui, a finance professor at Nankai University, stated in an interview with reporters that mergers and acquisitions can empower local economies, promote industrial upgrading, risk resolution, and stimulate economic vitality. Firstly, mergers and acquisitions can guide resources to cluster in new quality productivity fields such as artificial intelligence, biomedicine, and high-end equipment, promoting the transition of traditional industries towards high-end and intelligent development; Secondly, market-oriented mergers and acquisitions of problematic enterprises can activate existing resources and reduce regional financial risks; Finally, mergers and acquisitions can cultivate the competitiveness of top enterprises, attract capital, talent and other factors to gather, and enhance the regional economic level. From the perspective of key policy support directions, there are mainly three aspects: first, supporting high-quality traditional enterprises to transform and upgrade through mergers and acquisitions, and opening up a second growth curve; Secondly, support strategic emerging industry enterprises to carry out mergers and acquisitions around their main businesses and key links in the industrial chain, and accelerate their development towards new quality productivity; The third is to support enterprises to carry out cross regional and cross-border mergers and acquisitions. Li Xiao, Deputy Director of the Capital Market Regulation and Reform Research Center at Central University of Finance and Economics, stated in an interview with reporters that local governments' support for mergers and acquisitions can first promote industrial upgrading and the development of new quality productivity. Under the current background of economic transformation, local governments urgently need to guide resources to cluster in the field of new quality productivity through mergers and acquisitions, accelerate the high-end transformation of traditional industries and the scale transformation of emerging industries, and form new driving forces for economic growth; Secondly, optimize the efficiency of resource allocation. Mergers and acquisitions are the core means of market-oriented resource allocation. Local governments can break the resource segmentation between regions and industries through policy guidance, concentrate funds, technology, and talent towards advantageous enterprises and high potential fields, avoid low-level redundant construction, and improve total factor productivity; Finally, enhance regional economic competitiveness. As a leading enterprise in the regional economy, listed companies can quickly expand their scale, acquire technology or market channels, enhance their risk resistance capabilities, and drive the coordinated development of the upstream and downstream of the industrial chain through mergers and acquisitions. From the perspective of specific support measures, the policies introduced by local governments are highly focused on providing docking services, financing support, improving intermediary service levels, and strengthening risk prevention to overcome obstacles in mergers and acquisitions driven by both services and funds. In terms of docking services, Henan proposes to "support the establishment of merger and acquisition information service platforms" and "regularly visit listed companies and key target enterprises for mergers and acquisitions, providing comprehensive and multi-level docking services for enterprises"; Tianjin proposes to build a Tianjin capital market service platform and consolidate the reserve of merger and acquisition targets. In terms of financing support, many regions explicitly encourage the development of merger and acquisition loans and merger and acquisition funds. In terms of merger and acquisition loans, Henan proposes to guide banks to issue merger and acquisition restructuring loans, reasonably determine the scale, purpose, interest rate, and term of merger and acquisition loans, and appropriately tilt towards technology-based enterprises under compliance. Tianjin proposed to make good use of the pilot policy of technology enterprise merger and acquisition loans, and support the relaxation of the loan proportion in the merger and acquisition transaction volume of technology enterprises to no more than 80%. In practice, there has been an increase in M&A cases using M&A loans as a payment method. In the transaction of Guocheng Mining Co., Ltd. (hereinafter referred to as "Guocheng Mining") purchasing no less than 60% equity of Inner Mongolia Guocheng Industrial Co., Ltd., Guocheng Mining intends to pay the transaction price through its own funds, assuming debts, or bank merger and acquisition loans. The transaction is currently in progress. In terms of merger and acquisition funds, Henan proposes to support listed companies, platform companies, and core enterprises in the industry chain to establish new funds or use existing funds to participate in mergers and acquisitions; Tianjin proposes to support the cultivation of clustered M&A funds and improve the exit channels for M&A funds. In practice, local state-owned assets have established merger and acquisition funds one after another, and listed companies have also actively initiated or participated in the establishment of industrial merger and acquisition funds. According to data from Tonghuashun iFinD, since the introduction of the "Six Measures for Mergers and Acquisitions" last year, as of July 22 this year, 245 listed companies have announced their progress in participating in the establishment of industrial merger and acquisition funds, involving 279 industrial merger and acquisition funds. Listed companies also utilize existing funds to participate in mergers and acquisitions. On July 11th, Henan Shijia Photon Technology Co., Ltd. (hereinafter referred to as "Shijia Photon") announced that it plans to purchase 82.38% equity of Dongguan Fukima Communication Technology Co., Ltd. (hereinafter referred to as "Fukima") through issuing shares and paying cash. In February of this year, Shijia Photon purchased 53% of the equity of Fukima through Henan Hongqi Optoelectronic Industry Fund Partnership Enterprise (Limited Partnership). As the largest limited partner (LP) in the fund, Shijia Photon holds 44.49% of the paid in shares of the fund. In the eyes of market insiders, if this merger is completed, Shijia Photon will acquire control of Fukima through a "two-step" approach using industrial funds. The policies introduced by local governments directly target the pain points of mergers and acquisitions, forming a 'dual wheel drive' effect of services and funds. ”Tian Lihui stated that by building a service platform and regularly visiting and matching targets, the core obstacle of information asymmetry in corporate mergers and acquisitions can be solved, and information barriers can be broken down on the server side; Tilting loan resources towards technology-based enterprises significantly reduces financing costs for science and technology innovation enterprises. In addition, many regions emphasize the use of government funds to link social capital, forming a collaborative mechanism of "state-owned capital leading+market capital relay", and filling the liquidity gap on the funding side. Since the introduction of the "Six Measures for Mergers and Acquisitions", the focus of mergers and acquisitions in the field of new quality productivity has shifted towards "technological reinforcement". As of now, A-share companies have disclosed more than 200 major asset restructuring matters, among which the electronics, mechanical equipment and other industries have a large number of mergers and acquisitions, and the field of new quality productivity has become the main battlefield for mergers and acquisitions. Market insiders believe that with the support of local governments, there will be a new trend in mergers and acquisitions in the second half of the year. Based on local policy guidance and market practice, the three major trends of strengthening industrial logic, deepening regional coordination, and fund led optimization will dominate the next stage of mergers and acquisitions market. ”Tian Lihui stated that firstly, the focus of mergers and acquisitions has shifted from "scale expansion" to "technological reinforcement". Local governments explicitly support mergers and acquisitions around key technologies in the industrial chain, especially in bottleneck areas such as semiconductors and new materials, where the valuation premium of hard technology targets may become prominent; Secondly, cross regional mergers and acquisitions have become a new growth point, and the two-way flow of technology and market resources between regions will accelerate; Finally, government guided M&A funds have become trading hubs, and the proportion of industrialized M&A cases led by professional institutions is expected to increase significantly. However, local governments need to strengthen supervision and be wary of some enterprises exploiting policies for arbitrage. Li Xiao believes that there will be four major trends in mergers and acquisitions in the second half of the year: firstly, the normalization of mergers and acquisitions of technology-based enterprises will further increase their proportion. Top technology companies acquire 'hidden champions' in segmented fields to fill technological gaps, while listed companies cultivate a second growth curve through mergers and acquisitions; Secondly, cross regional mergers and acquisitions are heating up. Differentiated local policies will promote cross regional resource integration, and cross regional mergers and acquisitions are expected to promote the construction of a unified national market; Once again, cross-border mergers and acquisitions will become more rational, with a focus on supplementing and strengthening the supply chain; Finally, there is a dual promotion of standardization and specialization. The regulatory authorities will continue to strengthen the information disclosure and compliance review of mergers and acquisitions, while the professional role of intermediary institutions will be further highlighted. Mergers and acquisitions will focus more on synergy rather than scale expansion, and the valuation model will turn to "cash flow prediction+technical value evaluation" to reduce the risk of foam. (New Society)