Transfar Zhilian plans 550 mln yuan investment in 12-year VC fund; H1 operating cash flow turns negative

Shenzhen Commercial Daily · DuChuang Client | Reporter: Zhang Chi | September 28

Transfar Zhilian announced that it will participate as a limited partner in a private equity fund managed by Hengdian Capital Venture Investment (Zhejiang) Co., Ltd., a wholly-owned subsidiary of Hengdian Group Holdings Co., Ltd. The fund manager completed its registration with the Asset Management Association of China (AMAC) on December 19, 2017.

Fund Structure and Investment Focus

The fund primarily targets high-growth technology sectors through direct equity investments. Key structural details include:

• Duration: The partnership has an indefinite commercial lifespan, while the fund itself has a 12-year term, comprising an 8-year investment period and a 4-year exit period.
• Extension: The general partner may independently extend the partnership term twice, each time by one year.
• Management and Decision-Making: An investment decision committee, composed of three members appointed by the fund manager, oversees investment decisions. All committee members must unanimously approve any investment matter. Matters requiring partner meeting approval must be consented to by the general partner and at least two-thirds of the limited partners' voting rights.

Transfar Zhilian's Role and Investment Purpose

As a limited partner, Transfar Zhilian bears liability for partnership debts only to the extent of its capital contribution and does not participate in partnership operations. Management fees and profit distribution follow the terms of the partnership agreement.

The company stated that the investment aims to broaden investment channels, achieve synergy between industry and capital, and enhance sustainable development capabilities and overall corporate value.

Fund Status and Financial Context

The fund, named Hengdian Bohui, completed its private investment fund registration with AMAC on September 18, 2026, but remains in the capital-raising phase.

Transfar Zhilian's Financial Performance (First Half of 2026):

• Total operating revenue: RMB 7.899 billion, down RMB 4.347 billion or 35.50% year-on-year.
• Net profit attributable to shareholders: RMB 448 million, down RMB 60.6265 million or 11.92% year-on-year.
• Net cash flow from operations: RMB -489 million, a decline of 487.36% year-on-year, turning from positive to negative. The company attributed this to increased procurement driven by higher chemical business sales.
• Accounts receivable: Increased sharply from RMB 1.688 billion at the beginning of the year to RMB 2.889 billion, with its share of total assets rising by 3.04 percentage points.
• Cash and short-term debt: Period-end cash stood at RMB 3.481 billion, while short-term borrowings totaled RMB 3.407 billion and non-current liabilities due within one year reached RMB 1.717 billion, bringing total short-term debt to RMB 5.124 billion—exceeding the cash balance.

Liquidity and Risk Considerations

Despite the liquidity pressure, the company is investing RMB 550 million of its own funds in the venture capital fund. The company stated that the investment will not affect daily operations, and its liability is limited to its capital contribution, with no material impact on financial condition or operating results.

Governance and Risk Disclosure:

• The fund manager, Hengdian Capital, has no关联 relationship with Transfar Zhilian.
• All three members of the investment decision committee are appointed by the manager, and decisions require unanimous approval. Transfar Zhilian, as a limited partner, has no seat on the committee.
• The fund is currently in the capital subscription phase and still requires business registration changes and AMAC filing updates. The actual fundraising, capital contributions, and registration processes may involve uncertainties.
• Given the long investment cycle, the fund is subject to risks including macroeconomic conditions, industry policies, market cycles, and the operational performance of portfolio companies, which may result in failure to achieve investment objectives, lower-than-expected returns, or losses.

(Source: Shenzhen Commercial Daily · DuChuang)