Huacan Optoelectronics suffered losses and plans to raise 3 billion yuan by transferring Harmony Optoelectronics

Huacan Optoelectronics, formerly Wuhan Huacan Optoelectronics Co., Ltd., was founded in 2005 and restructured into a joint-stock company in 2011. Huacan Optoelectronics is a leading domestic supplier of LED (Light Emitting Diode) chips. As a high-tech enterprise in the field of "new materials and new energy", we are committed to the research, development, production and sales of high-quality LED epitaxial materials and chips, mainly GaN-based blue and green light series products. We have internationally leading technology research and development capabilities and mature production processes, and continue to innovate based on customer needs. We serve customers across the country, and our products have been successfully applied to many key projects in China.

On September 25, Huacan Optoelectronics announced that Tianjin Haihe Canxin Semiconductor Equity Investment Partnership (Limited Partnership) (hereinafter referred to as "Canxin Semiconductor"), jointly established by the company's wholly-owned subsidiary Guanghua (Tianjin) Investment Management Co., Ltd. (hereinafter referred to as "Tianjin Guanghua") and the company's subsidiary Huacan Optoelectronics (Zhejiang) Co., Ltd. (hereinafter referred to as "Zhejiang Subsidiary"), intends to raise 3 billion yuan. In order to complete the subsequent fund raising of Canxin Semiconductor, Tianjin Guanghua, as the general partner and fund manager of Canxin Semiconductor, will withdraw from Canxin Semiconductor, and the remaining partnership shares of Canxin Semiconductor will be subscribed by other investors.

In addition, on September 24, 2019, the board of directors of Huacan Optoelectronics reviewed and approved the "Proposal on Foreign Investment to Participate in the Establishment of a Fund", agreeing that Tianjin Guanghua would use its own funds of RMB 1 million as the subscribed capital, and authorized the company's chairman, Mr. Yu Xinhua, and his designated relevant personnel to handle the signing of the partnership agreement and related documents related to the fund raising of Canxin Semiconductor.

According to the disclosure, Brite Semiconductor mainly makes direct or indirect equity or quasi-equity investments in smart sensors, integrated circuits and other emerging smart technology industries. The fund investment amount is RMB 3 billion, and the investment method is RMB currency. Tianjin Guanghua invested RMB 1 million as a general partner, and Tianjin Haihe Industrial Fund Partnership (Limited Partnership) and Tibet Yaning Venture Capital Management Co., Ltd. subscribed for the remaining part as limited partners. 

It is worth mentioning that on the evening of September 24, Huacan Optoelectronics issued an announcement stating that in order to achieve new strategic goals, improve the company's liquidity, and realize the company's sustainable development, the company and Tianjin Haihuaxin signed a "Share Sale Intention Agreement" and planned to transfer the company's 100% equity in Harmonious Optoelectronics.

According to the information, Tianjin Haihuaxin is a newly established company, and its upper-level equity structure is only a transitional arrangement. The company's business scope includes integrated circuit research and development, design and sales; economic information consulting; business management; computer system integration; security technology prevention system engineering, electronic engineering, intelligent installation engineering design; electronic information, optomechanical integration technology and product development, consulting, service, and transfer.

Harmonious Optoelectronics' main asset is 100% equity of MEMSIC Semiconductor, a world-leading MEMS sensor company. Its main products are accelerometers and magnetic sensors, which are widely used in smart phones, consumer electronics, automotive safety systems and other fields.

At the beginning of 2018, Huacan Optoelectronics officially completed the acquisition of Harmony Optoelectronics. Less than two years later, Huacan Optoelectronics transferred it and established a sensor investment fund. Obviously, Huacan Optoelectronics is not pessimistic about the sensor business, but the continuous expansion of performance losses has forced it to "cut off its arm".

Huacan Optoelectronics stated that the fund invested this time mainly makes direct or indirect equity or quasi-equity investments in smart sensors, integrated circuits and other emerging smart technology industries. The investment direction is in line with the company's strategic needs and is related to the company's main business. In the long run, it will have a positive impact on the company's future development.