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Grand Group Investment PLC
First Day of Dealings on AIM

27 January 2015

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF AMERICA, SINGAPORE, HONG KONG, PEOPLES REPUBLIC OF CHINA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION OR ANY COPY OF IT MAY CONTRAVENE LOCAL SECURITIES LAWS OR REGULATIONS.

This announcement does not constitute an offer to sell or a solicitation of an offer to buy securities in any jurisdiction in which such offer or solicitation is unlawful. Investors should not subscribe for or purchase any transferable securities referred to in this announcement except on the basis of the information in the admission document ("Admission Document") intended to be published by Grand Group Investment PLC ("Company" or the "Group") in due course in connection with the proposed admission of its ordinary shares ("Ordinary Shares") to trading on the AIM Market of the London Stock Exchange plc ("Admission"). Copies of the Admission Document will, following publication, be available at the registered office of the Company, subject to applicable securities laws or regulations.

Grand Group Investment PLC
("Grand Group", the "Company" or the "Group")
First Day of Dealings on AIM

Grand Group Investment PLC, a provider of expansion capital and value added services to China-based SMEs with high growth potential, is pleased to announce the commencement at 08.00 a.m. today of dealings of its Ordinary Shares on AIM, a market operated by the London Stock Exchange plc. ZAI Corporate Finance acted as Nominated Adviser and Sole Broker to the Company. The stock market EPIC will be GIPO.L.

The Company, together with ZAI Corporate Finance, successfully raised £7.1 million (before expenses) in a fundraise by placing 8,952,631 million ordinary shares with institutional and other investors at a placing price of 80 pence per ordinary share (the "Placing"). Grand Group's market capitalisation on admission, based on the placing price, is approximately £27.1 million. The net proceeds of the Placing will be used by the Company in part to provide access to capital to finance its growth strategy, enable the Company to invest in the next company, Xinya and, to help accelerate the execution of the Group's strategy.

James Newman, Non-Executive Chairman of Grand Group Investment PLC, said: "We are delighted with the response from investors and the success of our AIM listing. This was a milestone event for us at Grand Group and the Board joins me in welcoming all of our new shareholders. We look forward to delivering on our promise to them as we move to the next stage of our development as a quoted company."

The Company's admission document can be found under the Investors section at www.grandgroupplc.com.

 

For further information:

Grand Group Investment PLC  
James Newman, Non-Executive Chairman Tel: +86 510 8329 1718
  www.grandgroupplc.com
ZAI Corporate Finance Limited  
Ray Zimmerman / Ivy Wang Tel: +44 (0) 20 7060 2220
  www.zaicf.com

 

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Notes to editors

About Grand Group

The Grand Group was founded in 2014 by Yang Xiao and other founding shareholders. The Company has been established for the purpose of identifying, acquiring and investing in small to medium-sized companies with high growth potential, principally operating in the People's Republic of China ("PRC").

Grand is a late stage incubator which focusses on investing in established businesses with either technology or intellectual property which the Board believes will benefit from Grand's university research resources.

Partnerships

The TKK Society has fostered and maintained a broad network of contacts with individuals at local and international higher education institutions, including: Jiangnan University; Xiamen University; Jimei University; NanYang Technological University (China); University of California Berkeley (Tan Kah Kee Hall); National University of Singapore; University of Hong Kong; Oxford Brookes University; Keuka College (New York State); and the University of Greenwich.

Amongst these universities, Grand has already established effective relationships with Jiangnan University and Jimei University for its current projects and the Directors believe that similar relationships can be developed with other universities.

The PE Market in China

The rapid growth of China SMEs has brought great opportunities since the 1980s for the Chinese PE industry. The Chinese PE market has been historically characterised by short term, low risk and high return investments, as a result of which, Chinese PE firms have had no incentive to develop value-added services, or to worry about medium to long term development.

According to 2013 China VC/PE Firms' Value-added Services Report, private equity needs to build management systems based on value-added services. By the end of 2012, there were more than 6,000 private equity (PE) investment firms in China. After 15-20 years of growth, in 2012-2013 China's PE market began to witness its first general decline, which can be seen by the decline of major PE metrics: fundraising, investment and exits. A large number of Chinese PE firms have invested in many businesses since the start of the PE market in China, but have yet to manage successful exits from these projects. According to the official statistics from Zero2IPO Research, between 2006 and 2012, VC/PE firms made 13,728 investments, with only 2,336 exits.

The 2013 China VC/PE Firms' Value-added Services Report states that VC/PE companies have begun to play the role of an "active investor", but few of the existing players, the Directors believe, are properly equipped to do so. Traditional Chinese PE firms normally only provide value-added services during the post-investment period, helping investee companies solve financial problems and achieve capital appreciation. In this respect, the Directors believe Grand Group is well-placed to meet the competition, as it provides value-added services in the pre-investment period as well as the post-investment period.

The Chinese SME market

The development of SMEs has increasingly contributed to China's economic growth. The output value of SMEs accounts for at least 60% of the country's gross domestic product, generating more than 82% of employment opportunities in China.

By industry distribution, the manufacturing industry accounts for 52.8% of SMEs, followed by the wholesale and retail industries (35.2%); construction (4.6%); and transportation and storage (2.6%).

The growth rate in the Chinese SME sector has logically been slowing down in recent years, after 30 years of rapid growth. Problems encountered by Chinese SMEs include weak linkage with external markets, weak technological innovation, and inadequate financial support.

SMEs have however become a major force in pushing forward China's science and technology innovation. SMEs account for 65% of the country's patented invention, 75% of corporate innovations and 80% of new product developments. The Directors believe that it is essential for SMEs to improve technological innovation and strengthen linkage with external resources to become better able to withstand risks and adapt to the changing economy in China. Grand Group's focus on the SME sector means it will have a large and fertile market in which to invest.

Investments - Victory

Victory produces vocational training software, and most importantly training videos for basic blue collar jobs, primarily in the metal working (known in China as the "metallurgy") sector. Victory works in a field which represents one of the fundamental social problems in the PRC today: that of unskilled labour migration from the countryside to urban areas.

Upon completion of the pre-IPO reorganisation, Grand acquired 33% of Victory from Shenzhen Grand, which had previously made an investment of RMB 196 million in cash into Victory. As at 30 June 2014, the fair value of the Company's investment in Victory remained RMB 196 million. The Directors understand Victory is targeting a flotation within the next two years.

Investment Pipeline

Fujian Xinya Group Co., Ltd. ("Xinya")
Xinya is a leading supply chain, "Internet of Things" or "IOT" enterprise which provides internet supply chain information and services for e-commerce platforms for foreign and domestic brands. Xinya has its own self-developed order management system ("OMS") and warehouse management system ("WMS") which provides customers with information and services for supply chain management, such as order processing product design, warehousing, customs clearance and distribution. Xinya is currently the warehousing partner of Taobao, Jingdong, Vancl and other relevant e-commerce platforms in Fujian.

Directors

Mr Yang Xiao, Executive Director (aged 50)
Mr Yang initiated Grand's focus on the SME technology innovation PE fund, backed by his strong relationships with the TKK Society and investor network. Mr Yang has worked in media and the brand marketing industry for over 25 years during which period he successfully completed a series of marketing strategies for Chinese SMEs, many of which are listed on international stock markets.

Mr Yang has extensive experience of investing in media and culture sectors. In 2013 Mr Yang co-founded one of the largest pools of high net worth individuals and entrepreneurs in the area. Mr Yang introduced Grand's first investment project, Victory. Mr Yang has committed a significant amount of his resources towards making Grand one of the leading private investment funds in China.

Mr Zhou Jiang, Executive Director (aged 43)
Mr Zhou is currently Chief Secretary of the TKK Society (China), Director of the TKK innovation fund of Jiangnan University, Director of the Institute of Light Industry of Jiangnan University (joint funded by the Xinya Group), and a director of Victory Cayman. Mr Zhou previously headed up Lion Global Investors Limited (China). Before Mr Zhou joined the TKK Society he worked in the marketing and advertising industry in China for over 20 years. He was in charge of a series of business cooperation projects with international brands including Pierre Cardin, Apple, and Coca-Cola, along with Wuxi government associated business brands including TianJiao.

Mr Li Chuang, Executive Director (aged 28)
Mr Li is the Executive Director of New Horizon Strategy Investment and a member of the TKK International Institute. Previously, he was investment project manager at Lion Global Investors Limited. New Horizon Strategy Investment and Lion Global Investors Limited are subsidiary investment fund management firms of OCBC Bank and represent the majority of OCBC's investments in the Greater China Region. Mr Li has experience in private investment and fundraising for large scale projects in cultural education, new material energy, TMT, IT engineering, technology industrialisation and technology incubation in China. Mr Li has completed a number of large scale private investment projects as chief investment project manager including: Ruiyun Cloud Computing R&D and Construction Co. Ltd, ENN Group, Fortune Media (Group) Culture Development Co. Ltd., and an O2O Company.

Ms Gu Yingying, Executive Director (aged 32)
With experience in investment and investment banking, particularly on TMT, culture, education and agriculture, Ms Gu has been involved in a series of investment projects with the Tan family in the education sector in China. Significant investment projects include the first Sino-foreign cooperative education project, the Jimei University Chenyi College, and establishing one of China's first online education websites (www.chinaedu.net).

Non-executive Directors

James Newman, Non-Executive Chairman (aged 58)
Mr Newman's 30 year career in finance has been focussed on Asia generally and China in particular. He started out in commercial lending, and later worked in investment banking and investment management with Citigroup and, most recently, as head of Global Equities at Alliance Trust. During his career Mr Newman has analysed, invested in, provided loans to or advised numerous Chinese companies from a wide variety of sectors. Now based in the UK, he lived in Mainland China, Taiwan and Hong Kong for 16 years, and speaks Mandarin Chinese.

Mark Hemmann, Non-Executive Director (aged 44)
Mr Hemmann is a private equity, banking and finance executive with a broad background in capital markets, Chinese companies, aviation, leasing, and operations garnered over the past 16 years. In addition to his current position as an independent director with Grand Group, he currently is leveraging his broad experience in China and along with Shanghai's Southwind Equity Management Company, has founded one of China's first distressed asset funds, China Special Situations Fund I.

Stephen Roberts, Non-Executive Director (aged 62)
After graduating with a Master's Degree in Economics from the University of Wales, Mr Roberts spent his early career in venture capital before leaving County Natwest in 1987 to focus on the public markets with Midland Bank which was later acquired by HSBC. After 10 years of acting as adviser and broker to numerous public companies, he left to join Charterhouse Securities as a director in 1996. In 2000 he joined Collins Stewart, before becoming Head of Corporate Finance at Evolution Securities in 2004. He was later to become Head of Corporate Finance at Fairfax and Daniel Stewart.

Throughout his career in stockbroking, Mr Roberts specialised in the provision of corporate finance advice to smaller companies in the public markets acting in numerous initial public offerings, reverse takeovers and equity fundraisings.

For further information, please visit www.grandgroupplc.com.

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