2018.04.18 Wu Liangliang Views:
In Anhui Province, the PE fund has played an increasingly important role in raising the proportion of direct financing and boosting the healthy development of the multi-level capital market, thus becoming an important force to support the real economy. Attracted by Anhui’s sound industrial development environment, a domestic PE firm CoStone Capital comes to invest in Anhui. By connecting “capital and industrial resources”, it continuously enlarges the amount and scale of the investments to cultivate and support start-up companies. And that continues to yield results.
In Anhui Province, the PE fund has played an increasingly important role in raising the proportion of direct financing and boosting the healthy development of the multi-level capital market, thus becoming an important force to support the real economy. Attracted by Anhui’s sound industrial development environment, a domestic PE firm CoStone Capital comes to invest in Anhui. By connecting “capital and industrial resources”, it continuously enlarges the amount and scale of the investments to cultivate and support start-up companies. And that continues to yield results.
EFORT managed to acquire W.F.C. Group
In late March, W.F.C Group, a subsidiary of EFORT Intelligent Equipment Co., Ltd. (688165.SH), successfully won the bid for welding production line projects of General Motors (GM.N) and Volkswagen (VOWG). The contract is worth nearly 70 million euros, under which more than 400 robots are expected to be integrated. The bid can further demonstrate Anhui enterprises’ strength to directly participate in the international competition in the high-end robot system integration market.
W.F.C Group, an Italian automotive equipment and robot system integrator, was once well-known in Europe. On September 28, 2017, Italian time, EFORT acquired W.F.C Group. That was EFORT’s fourth overseas M&A, to which PE firms have made a great contribution.
In the middle of last year, some strategic institutional investors led by CoStone Capital, a famous domestic PE firm, decided to jointly increase the capital of EFORT and carried out close cooperation with it to further improve the distribution of industrial chain, domestic and overseas market expansion, and capital operation. Acquisition of W.F.C Group was a significant step afterward. "The scale of this overseas M&A target is beyond EFORT 's capabilities. And completion of that M&A through PE has promoted corporate influence and competitiveness of EFORT to a new level," said Dr. You Wei, Executive Director and Chief Engineer of EFORT.
CoStone Capital founded Pharmplus in Ma’anshan City, Anhui Province in 2016
In 2016, CoStone Capital founded Pharmplus Investment Management Co., Ltd. in Ma’anshan City, Anhui Province, and now Pharmplus has come to the forefront of the retail pharmacy field. Pharmplus has more than 1,500 pharmacies, generating a turnover of 4 billion RMB. The two-year-old company is committing itself to build a modern pharmacy service system that integrates pharmacy entities, pharmacy services, B2C, and PBM, in an attempt to build a new pharmacy business form of "product + service".
On November 19, 2015, CoStone Capital was chosen to be the manager of the Anhui Industrial Upgrading Fund of 10 billion RMB. Since then, CoStone Capital has been vigorously cultivating and supporting emerging industries in Anhui, taking good advantage of capital and industrial resources. Nowadays, it has nearly 20 billion RMB fund under management here, and its accumulated tax payment reaches nearly 100 million RMB. It is estimated that the total tax payment of CoStone in Anhui from 2018 to 2019 will exceed 200 million RMB. So far, it has invested in 8 major portfolios here, with a total investment of nearly 7 billion RMB, giving rise to a sharp increase in corporate incomes and industry status of certain companies after the investment.
"It has always been our goal to support Anhui enterprises and serve the real economy." Zhang Wei, Chairman of CoStone Capital, believes that Anhui has been in a critical period of industrial upgrading. It can be complementary with European and American countries, which have greater technological advantages in the advanced manufacturing industry but with saturated markets. "We will integrate domestic and foreign industrial resources for the benefit of Anhui enterprises through equity investment, mergers and restructuring, cross-border M&A, and private placement, in order to improve the core competitiveness of relevant companies and industries."
Zhang Wei concludes the four models CoStone Capital has developed to serve Anhui companies as follow:
Firstly, the new method of attracting FDI – under the guidance of global perspective and strategic thinking, CoStone encourages the most outstanding domestic companies to settle in Anhui with the help of the capital market.
Secondly, CoStone makes full use of such financial tools and financial means as private placement and M&A to support the transformation and upgrading of the existing listed companies in Anhui into strategic emerging industries.
Thirdly, the 2.0 version of mixed ownership reform working along with asset integration and restructuring – which means vertical or horizontal M&A of competitive business portfolios or high-quality assets, and careful distribution of denotative and connotative expansion, to improve the efficiency of Anhui's traditional competitive industries.
Fourthly, CoStone combines the shutdown of outdated production capacity with the “vacating the cage for birds” strategy, that is, introducing strategic emerging industries to replace old growth drivers in the listed companies’ resources with new ones.
In May last year, the Anhui government issued documents concerning the promotion of the concentrated development of PE funds. A variety of domestic and foreign PE firms were encouraged to settle or be established there. As a successful example of investors representative for its investment operation in Anhui, CoStone Capital was introduced in detail by the official media Anhui Daily on its investment strategies.
This is part of the article on Anhui Daily. For the full transcript of the original interview, please refer to http://stonevc.com/news_view.aspx?Fid=t2:5:2&Id=689&TypeId=5&IsActiveTarget=True
Rewritten by Xu Xinru, Edited by Du Zhixin, Li Yunzhen
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026