As 2025 marks the sixth anniversary of Xinyin Wealth Management Co., Ltd., it also signifies six significant years of investment in Lingxi Robotics by this financial institutionIn the current landscape of the Chinese economy, where regulatory policies encourage long-term investment, bank wealth management is transitioning to what is being termed as "patient capital." This shift aims to provide sustainable financial support for enterprises striving for steady growth over the long haul.
Recently, Hangzhou Lingxi Robotics Intelligent Technology Co., Ltd. achieved an important milestone by receiving recognition for its innovative "3D+AI" smart robotic imaging solutions as a "typical application scenario in Zhejiang Province for the year 2024." This acknowledgment highlights the company's role as a key player in the burgeoning field of robotic technology.
Lingxi Robotics is emblematic of high-tech enterprises that not only possess advanced visual capabilities but also a sophisticated "brain," which represents their innovative thinking and strategic direction in robotics
Such companies typically require substantial initial funding and have lengthy development cyclesMoreover, they face higher levels of investment risk, thus necessitating the support of "patient capital." This type of funding is characterized by a longer investment horizon and is crucial for nurturing startups in high-tech industries where early returns are not guaranteed.
Patient capital springs from various sources, including private equity (PE), venture capital (VC), pension funds, insurance companies, and sovereign wealth fundsIn recent years, the role of bank wealth management in this area has become increasingly significant, transforming it into a notable player in long-term investment.
Xinyin Wealth Management, integrated into the broader financial system, undertook its first direct investment in an unlisted company's equity through Lingxi RoboticsThis opportunity was identified by Xinyin's investment team, who were proactive in their market research to explore viable investment channels.
At the time of initial engagement, Xinyin recognized the potential of the 3D vision industrial robotics sector
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Lingxi Robotics had recently secured specific orders from logistics and e-commerce companies, although market validation from downstream clients was still pendingThe company had a revenue scale in the millions, coupled with a relatively low market valuation, which presented both a challenge and an opportunity for investors seeking long-term gains.
Nevertheless, the low valuation came with inherent risksAccording to Tang Yijun, assistant general manager of Xinyin's comprehensive financing division, early-stage companies often suffer from insufficient market validation and a poor risk resistance capacityIf Lingxi's technology could not garner the recognition of major manufacturers, the risk of market elimination loomed largeThis reality underscored the necessity for investors to have an in-depth understanding of the industry.
Through ongoing diligence, Xinyin leveraged its parent bank, CITIC Bank's extensive customer network in the industrial manufacturing sector
This engagement involved conversations and research to ascertain market demand for machine vision technologyFurthermore, Xinyin’s investment team conducted site visits to Lingxi's logistics partners to assess the company’s technical capabilities and its broader market potential, affirming the significant business opportunities ahead.
After an in-depth discussion with Lingxi's founder, Ding Ding, both parties found alignment in their investment philosophiesConsequently, a swift agreement was reached for Xinyin to lead the Pre-A round fundingLingxi’s existing investors shared the optimism towards the company’s financing and decided to increase their stakes as well.
Soon after, the efforts paid off; validation from major downstream clients led to explosive revenue growth for Lingxi RoboticsIn 2021, the company’s revenue increased over fivefold year-on-year, followed by another doubling of revenue in 2022. This remarkable acceleration captured the attention of professional investment institutions, significantly enhancing Lingxi’s market valuation.
Notably, Xinyin Wealth is amongst the pioneering institutions in the wealth management sector to engage in direct equity investments in unlisted companies
When choosing equity investment projects, Tang Yijun highlights several critical factors: macroeconomic conditions, the state of specific industry sectors, the company's intrinsic resources, risk profile, synergistic growth potential, and investment costs.
In the realm of equity investment, Xinyin has established a mature screening mechanismThe company draws on macro and industry research to identify key segments of focus, utilizing CITIC Group’s resources to uncover potential investments, evaluating each target’s team, technology, market environment, and financial status comprehensivelyBy balancing advantageous and disadvantageous factors, Xinyin endeavors to unearth the growth potential of its investments.
Equity investment is marked by longer cycles and heightened risks, which demands patient capitalXinyin's investment products focused on Lingxi targeted high-net-worth qualified investors, designed to align the project timelines with the risks associated
The company invested considerable resources to conduct detailed presentations for potential clients, successfully matching funding requirements.
Xinyin’s collaboration with Lingxi Robotics has enriched its experience in ongoing technological investmentsTang Yijun notes that supporting Lingxi has catalyzed a successful framework for strategizing in fields of technological innovation, creating a closed-loop of research, analysis, and investment strategyAdditionally, this project represents the first instance of a wealth management product investing directly into the equity of an unlisted enterprise, achieving significant breakthroughs in product design, investment protocol, and registration processes, thus setting a precedent for subsequent direct investment initiatives.
In the medical research space, “patient” support plays a crucial role tooAt the end of 2024, Chengdian (Suzhou) Biopharmaceutical Co., Ltd. reached a critical development milestone
Established in April 2021, the firm focuses on the development of a new generation of precision immunotherapy drugsFollowing approval from the US FDA, they also received the National Medical Products Administration's approval for their first-in-human clinical trial, marking a milestone for the company and the industry at large.
The pharmaceutical sector is known for long and expensive development cycles, with the adage circulating that it takes about ten years, with a billion-dollar investment and only a 10% success rate to bring a targeted drug to marketThis landscape is where patient capital proves invaluable; steadfast financing is needed to navigate these challenges.
In 2024, when Xinyin initially funded Chengdian Biopharmaceuticals, the company was still in the research phaseAlthough they had entered clinical trials, market readiness remained a distant goalThrough initial market explorations, Xinyin recognized that Chengdian, with its internationally competitive team and groundbreaking technology, required diversified financial support, leading them to finalize a strategic debt plan that incorporated effective risk mitigation measures.
Xinyin Wealth has a rich history of successful investments in the pharmaceutical space, navigating through IPO exits, showcasing their commitment to long-term investments in healthcare.
Investments in pharmaceuticals carry notable risks, resulting in a high bar for expertise among investment firms
Tang Yijun emphasizes the need for a structured investment framework focused on evaluating drug pipelines, assessing R&D progress, and distinguishing from competitors while identifying projects with high commercial viability.
As a capital-intensive segment, how does Xinyin manage risk in biopharmaceutical investments? Tang mentions the field’s long and uncertain nature necessitating sustained fundingCurrently, Xinyin is focusing more on mature clinical stages, rigorously assessing clinical data quality and research progress whilst nurturing collaborations with other investors and research entities to provide comprehensive financial services bolstering the sustained development of pharmaceutical enterprises.
As China's economic landscape evolves, the importance of patient capital is increasingly evidentAn April 2024 meeting underscored the need to "actively develop venture capital and strengthen patient capital." By September 2024, the National Financial Supervision Administration encouraged asset management companies to strengthen their equity investment capabilities, advocating the launch of long-term equity products, thus enhancing their role in the capital market.
Establishing as a provider of patient capital isn't an overnight feat; it requires relentless effort
Since its inception in July 2020, Xinyin Wealth has been committed to cultivating a specialized investment team, focusing on equity investment and capital markets, enhancing their evaluation and selection of innovative technology enterprisesBy the end of 2024, Xinyin had offered various financial tools to over 220 listed companies and invested in more than 250 tech innovation firms via direct investments or equity fundsTheir investment strategies have impacted over 2,000 technology-driven enterprises, showcasing their robust market engagement.
Integrating CITIC Group's financial resources with industry capabilities, Xinyin leverages CITIC Bank’s nationwide marketing outreach, propelling sector-specific research and establishing strategic asset investment tactics that respond to the fast-evolving financing needs of technology enterprises.
However, the typical short duration of bank wealth management products presents challenges for long-term investments, especially regarding funding alignment
Tang noted that while mid- to long-term financial products still require significant exploration, sales of products with one-year terms are notably challenging, prompting the need for ongoing investment in brand recognition and marketing while ensuring investors’ risk appetites are accurately identified.
As Xinyin adapts its asset management strategy in response to shifting market interest rates, expanding sources of stable long-term returns remains vitalTang underlined plans to diversify asset types to nurture a multi-faceted approach that captures returns from various channels such as debt, equity, and ownership structures.
As of December 2024, data indicated that the bank wealth management market was valued at 29.95 trillion yuan, growing by 11.75% in a yearThis growth is underscored by the issuance of 30,800 new wealth management products, raising 67.31 trillion yuan, with funds supporting the real economy amounting to 21 trillion yuan.
Looking towards the future, Tang emphasized that as part of a strategic focus, Xinyin Wealth Management has identified five critical objectives in their asset management mandate, integrating them into both short- and long-term goals while fostering a commitment to long-termism as a foundation for sustainable development.