On December 8, 2019, Shenzhen Qianhai Development and Investment Holding Limited and China Merchants Qianhai Industrial Development Co., Ltd. signed the Capital Increase Agreement with Shenzhen Qianhai Shekou Free Trade Investment Development Co., Ltd. ("the joint venture"), agreeing to increase capital in the latter with 100% equities of Qianhai Hongyu Industrial Investment Co., Ltd. ("Qianhai Hongyu") held by Qianhai Development and Investment Holding Limited and the 100% equities of China Merchants Qianhai Chidi Industry Co., Ltd. ("China Merchants Qianhai Chidi") and RMB 8.5 billion in cash held by China Merchants Qianhai Industrial Development Co., Ltd.
As of September 30, 2019, the 100% equities of Qianhai Hongyu was valued at RMB 72.9 billion and those of China Merchants Qianhai Chidi at RMB 64.3 billion, bringing the deal value to about RMB 145.8 billion. After the conclusion of the deal, the joint venture will still be equally held by the two investors. The deal involved the change of land use right nature, explored a new mode of joint venture cooperation, and marked a historic leap for the two investors on the RMB 100 billion-worth joint land development project.
Leveraging the two investors' experience and expertise in industry planning, institutional innovation, development & construction, and operation & management, the joint venture will speed up to build the zone, put it into operation and management and attract industrial tenants, promote the gathering of pro-innovation elements, contribute to the Belt and Road Initiative, and build a base for the international expansion of Chinese enterprises and a platform for Shenzhen-Hong Kong cooperation.
As the legal counsel for Shenzhen Qianhai Development and Investment Holding Limited, the DeHeng team, led by partner Su Qiyun and with primary support from lawyer Xu Yansong, provided whole-process legal services for the client, from the incorporation of the joint venture to the signing of the Joint Venture Agreement, Land Consolidation Agreement and this Capital Increase Agreement, drafting, revising and reviewing nearly a thousand copies of documents.
Factoring into the characteristics of the deal and the demands of the client, the DeHeng team conducted thorough and objective analysis on major legal issues including but not limited to the subject, mode, amount and payment method of capital increase, joint venture governance after the capital increase, staff arrangment, taxation, rigid expenditure required by policies, and arrangements for the transitional period. Accordingly they produced comprehensive legal opinion on how to avoid legal risks, designed and demonstrated the deal scheme and implementation path, helped the client with the negotiations, drafting and revision of relevant documents, coordinated and communicated with government organs concerned, and pushed the project into a milestone stage. Deheng team have realized many innovative achievements in this project on a state level and will continue to provide follow-up legal services.