Research On Motivation And Economic Consequences Of Asset Injection Oriented Private Placement

With the completion of China's share division reform and the improvement of stock issuing system,private placement is favored by more and more listed companies due to its easy release conditions,short release time,and low issuance costs.According to statistics,the scale of financing for China's A-share private placement in 2016 reached 1.39 trillion yuan,which is approximately ten times the scale of financing in 2006.The private placement is usually divided into four types based on the motivation of the issuance: project financing,asset injection,merger and reorganization,and introduction of strategic investors.The private placement of asset injection can raise development funds for enterprises,and at the same time inject high-quality assets into listed companies,thus reducing associated transactions and peer competition,lowering operating costs,and improving the competitiveness of companies.So many listed companies hope to promote their long-term development through the private placement of asset injection.In order to inject the high-quality assets into listed companies,Ruyi Shandong makes use of the synergistic effect of the upstream and downstream industrial chains.Initially,it intended to realize the overall listing through asset reorganization.However,due to the fact that most of the cross-border businesses in Ruyi Shandong involve joint ventures,different policies among the countries have brought great difficulties to asset reorganization.What is worse,the regulation that “If the company form backdoor listing,its injected assets must be operated under the control of the injector for three years”obstructs the process.Under this background,Ruyi Shandong decides to achieve the injection of good assets through private placement and achieves success.Based on a comprehensive grasp of the characteristics of the private placement of asset injection,this paper will concentrate on the additional cases in Ruyi Shandong.After a serious understanding of the background and motivation of this private placement,this paper analyzes the economic consequences of the private placement of asset injection from the aspects of the asset quality of the company,the shareholder value,and the financial indicators.Finally the relevant conclusions and suggestions are reached to guide the listed companies to rationally adopt the financing method of private placement of asset injection,thus reducing financing costs,realizing asset integration,playing a synergistic role,improving market performance,and promoting the long-term development of the listed companies.