At the end of the year, Shanghai launched a major action in the field of mergers and acquisitions. Today, the General Office of the Shanghai Municipal People's Government issued the "Shanghai Support for Listed Companies Merger and Acquisition Action Plan (2025-2027)" (referred to as the "Action Plan"). The "Action Plan" aims to achieve the landing of a group of key industry representative merger and acquisition cases by 2027, fostering around 10 internationally competitive listed companies in key industries such as integrated circuits, biomedicine, and new materials. In terms of amount, it aims to create a merger and acquisition transaction scale of 300 billion yuan, activate total assets exceeding 2 trillion yuan, and gather 3-5 professional merger and acquisition fund managers with strong industry influence. The plan also proposes the use of a 10 billion yuan integrated circuit design industry merger and acquisition fund, and the establishment of a 10 billion yuan biopharmaceutical industry merger and acquisition fund. From now on, following Shenzhen and Anhui, Shanghai is also making efforts in mergers and acquisitions. Big move! Shanghai's 10 billion yuan integrated circuit design industry merger and acquisition fund is here Different from the "green channel" policies of Shenzhen and Anhui that utilize stock and debt financing for mergers and acquisitions and the development of equity investment-type merger funds, this time Shanghai directly provides the scale of the merger and acquisition fund. In July of this year, when Shanghai promoted the establishment of three pilot industry mother funds with a total scale of 100 billion yuan, it stated that it would focus on the three leading industries of integrated circuits, biomedicine, and artificial intelligence, and play a role in "early investment, small investment", industry investment, merger and integration, chain enhancement and chain strengthening functions to enhance the overall level and development of the three leading industries in Shanghai. The statement in the "Action Plan" about the establishment of a "10 billion yuan integrated circuit design industry merger and acquisition fund" is seen as a supplement to the 100 billion yuan three pilot industry mother fund. Yuan Shuai, founder of the New Intelligence Generation Productivity Salon, stated in an interview with the "Science and Technology Innovation Board Daily" that the Yangtze River Delta area, where Shanghai is located, is a heavy weight in the integrated circuit industry. The establishment of the 10 billion yuan integrated circuit design industry merger and acquisition fund is a strong support for Shanghai's semiconductor design industry. Yuan Shuai commented, "Currently, the Yangtze River Delta has many excellent semiconductor companies and research institutions, and Shanghai has many top domestic and international semiconductor design companies, such as GLEEDS Electronics, Lantu Technology, Fudan Microelectronics, Weir Holdings, Aojet Technology, and SMIC. Establishing industry mergers and acquisitions will help integrate industry resources, promote industry convergence, and form a group of design companies with strength and key core technologies." Bu Rixin, a partner at Chuangdao Investment Consulting, stated in an interview with the "Science and Technology Innovation Board Daily" that the 10 billion merger fund is mainly aimed at the "integrated circuit design industry", which may be related to the end of the IPO dividend period for chip design companies. Bu Rixin believes that in recent years, after the IPO wave of semiconductor and chip design companies, the IPO dividend period for these companies has basically ended. "Except for some major areas in the chip sector that have not been completely replaced, there are already listed companies in each segment, and these areas have experienced serious internal competition at the low-end product level. In the future, encouraging companies in these areas to IPO is equivalent to encouraging industry disordered competition." Bu Rixin stated that the only way forward is through mergers and acquisitions, accelerating industrial integration to promote industry development in a healthy manner, which is one of the most effective measures. The "Science and Technology Innovation Board Daily" journalist noted that in the past year, there have indeed been many semiconductor companies that have terminated their IPO processes. For example, after nearly 10 months of passing the examination, Chengdu Ruiyuan Semiconductor Technology Co., Ltd. terminated its IPO. In addition, more than 20 other companies in the semiconductor industry also voluntarily withdrew their materials to terminate their IPO after on-site inspections. Among them, Chengdu Ruiyuan Semiconductor mainly engages in the research, design, packaging, testing, and sales of power management chips, and one of its main products is DC/DC chips. Among the A-share listed companies, companies such as Crystal Fung Mingyuan, Fumangwei, Shanghai Beiling, and Xiwaiwei all have a certain market share and competitiveness in the DC/DC chip market. However, in the large chip sector such as GPU, no companies have yet gone public. Currently, companies like Moore Threads, Biren Technology, and Suiyuan Technology have all started the IPO counseling process. A 10 billion yuan biopharmaceutical industry merger and acquisition fund will also be established. In addition to the integrated circuit design industry, Shanghai will also set up a merger and acquisition fund for the biopharmaceutical industry, with a scale of 10 billion yuan. Regarding the biopharmaceutical industry, Bu Rixin told the "Science and Technology Innovation Board Daily" that the investment cycle in biopharmaceuticals is generally longer, requiring multiple stages from research and development to listing. "Because the industry is a typical 'Big, Long, and Gold' industry, with high risk, a long cycle, and high investment, the nature of biopharmaceuticals also determines that they need mergers and acquisitions to grow and strengthen in the current environment." Since the second half of 2024, the A-share market has seen many large-scale acquisitions, accelerating the integration of the biopharmaceutical industry. For example, China Biopharmaceutical plans to acquire about 55% of Hao Europe in a "protocol + tender offer" manner, Qianhong Pharmaceutical plans to invest 390 million yuan in Fan Yuan Pharmaceutical for bankruptcy reorganization, Pharmacist intends to acquire Yikang Pharmaceutical, New Noah intends to acquire Shi Yao Bai Ke, Sichuan Shuangma announced a cross-border acquisition of Jianyuan Pharmaceutical... As one of Shanghai's leading industries, the scale of the biopharmaceutical industry is already close to a trillion yuan. By 2023, the industry scale reached 933.732 billion yuan, an increase of 4.9%; Shanghai's biopharmaceutical industry chain is relatively complete, with multiple medical device companies as well as CRO, CMO, and CSO companies. Therefore, Yuan Shuai believes that the Shanghai Municipal Government's establishment of a 10 billion yuan biopharmaceutical industry merger and acquisition fund is expected to foster internationally competitive biopharmaceutical companies through mergers and acquisitions. It is worth mentioning that the "Action Plan" also mentions that if "chain-leading" companies conduct mergers and acquisitions around key points of their industry chain through Corporate Venture Capital (CVC), the establishment of CVC funds will be included in the fast track. At the same time, government investment funds can participate in merger and acquisition funds through common stock, preferred stock, convertible bonds, etc., and appropriately pass on benefits. Bu Rixin believes that "chain-leading" companies, as market-oriented institutions establishing CVC funds, will conduct horizontal and vertical mergers and acquisitions around the key points of the industry chain. "This type of merger and acquisition will help 'chain-leading' companies expand market scale, promote industry consolidation, and create a batch of design companies with strength and key core technologies.""Improving market competitiveness is the most in line with the logic of mergers and acquisitions, and it is also the basic logic of the 'Action Plan' encouraging 'chain leaders' to establish CVC funds.""Government participation in and merger and acquisition funds does not mean that the government will lead the M&A business, but through the support of the above-mentioned M&A funds or parent funds, it encourages market-oriented institutions and key enterprises in the supply chain to lead the implementation of M&A transactions," said Bu Rixin. In his view, the $10 billion M&A fund does not only have $10 billion in funds, but through the amplification of the M&A fund, it drives more funds to participate in M&A transactions, which is also a way for the government to encourage and guide M&A. "In any case, whether it is the M&A fund of the integrated circuit design industry or the M&A fund of the biopharmaceutical industry, the core purpose is to guide the industry's orderly development, avoid reliance on the IPO path, and prevent excessive competition in the industry." This article is reprinted from Caixin, GMTEight Editor: Chen Wenfang.