Environmental protection industry meets the golden period of "borrow money to lay eggs"

        New normal of economy, new normal of environmental protection. In recent years, there have been four waves of capital operation in the environmental protection industry, and the financial sector has vigorously supported the environmental protection capital market, making the environmental protection industry usher in a golden opportunity period of "borrowing capital to lay eggs", accelerating development, or relying on capital strength to achieve win-win results.

        Environmental protection industry meets the golden period of "borrow money to lay eggs"

        In recent years, China's environmental protection industry has set off a boom in capital operation. Statistics show that as of February 6, there have been 139 merger and reorganization cases in China's environmental protection industry in the past year, an increase of 49 over the previous year; the amount involved is 30.502 billion yuan, an increase of 8.407 billion yuan over the previous year.

        Under the general trend of China's economy entering into a new normal, various new environmental pollution control modes are constantly explored and promoted. Many environmental protection enterprises are growing and strengthening through M & A, setting up M & a funds, issuing M & a private bonds and other capital operation modes, and the environmental protection industry ushers in a golden opportunity period of "laying eggs by borrowing capital" and accelerating development.

        Environmental protection industry raises capital operation tide

        China's environmental protection industry is in the parallel stage of the establishment of environmental protection system and the movement of raising standards, so there are many reasons for the capital operation within the industry. Some environmental protection projects, such as waste treatment plants and sewage treatment plants, operate in PPP mode (government and social capital cooperation). Environmental protection enterprises need to invest a large amount of initial capital in the construction cycle, and also need working capital in the operation period to purchase power and chemicals, carry out equipment maintenance, labor costs, etc., which requires environmental protection enterprises to raise funds through capital operation.

        "Due to the characteristics of large investment in municipal public infrastructure and long recovery cycle, listed companies in the environmental protection industry tend to absorb long-term funds from stable sources." Fan Peipei, project director of the research department of the chamber of environmental services of the all China Federation of industry and commerce, said that at present, there are problems in China's financial system, such as difficult financing, expensive financing and high financial costs. Indirect financing methods, such as bank loans and bond financing, have many disadvantages, such as long approval, high cost and unreasonable structure.

        "Bank loan is one of the sources of funds with lower financial cost, but environmental protection enterprises need signed projects because of less collateral, low credit line of bank loan, long application and approval process. Therefore, it is a better choice to issue stocks, corporate bonds, credit bonds and other direct financing methods in the securities market. " Van Peipei said frankly.

        Capital operation is a necessary condition for the rapid growth of enterprises. Domestic large-scale environmental protection enterprises, such as Beikong water, sound environment and Bishui, are all leading enterprises in this field. For them, the acquisition of signed projects or small environmental protection enterprises is a shortcut to expand market share and increase market share, as well as one of the development strategies to win the favor of social capital and maintain growth.

        "For small-scale environmental protection enterprises, when applying for bank loan to provide mortgage or pledge, they need to pay financial consulting fees and handling fees, as well as intermediary evaluation and guarantee fees, etc., so the financing cost is high." According to Marles, Secretary of the board of directors of sound environment group, small and medium-sized environmental protection enterprises acquired by large groups can obtain financing guarantee support from the group, solve problems such as long-term capital sources, improve bargaining power, obtain resources such as equipment procurement, comprehensive management, technology research and development, and improve competitiveness. Therefore, M & A and other capital operation mode is a realistic choice for both sides to achieve win-win situation.

        It is not smooth sailing for enterprises to become bigger and stronger

        In recent years, the domestic environmental protection industry has grown at an annual rate of about 20%, especially the environmental service industry and environmental protection equipment manufacturing industry, with an increase of about 30%. However, environmental protection industry is a typical policy driven industry, its operation and development need a complete industrial support policy system as the basic support.

        In the newly revised Measures for the administration of major assets reorganization of listed companies, the CSRC has cancelled many requirements and restrictions, such as the examination and approval procedures for general merger and acquisition, the lower number of shares to be issued and the threshold for the amount of shares to be issued. The relevant policies issued by the regulatory authorities have reduced the time cost of environmental protection enterprises' m & A, and the choice of M & A will be broader.

        Wu Yi, an environmental protection industry analyst at Cinda securities, said that with the introduction of relevant opinions, China's environmental protection industry and listed companies involved in energy conservation and environmental protection will usher in a lot of good news. The opinion clearly puts forward the development of environmental protection capital market, which is enough to show the importance of environmental protection sector in the operation of capital market.

        It is worth noting that although the relevant policies of environmental protection capital market are becoming more and more perfect, the way for environmental protection enterprises to become bigger and stronger is not smooth. China's stock issuance system is not a registration system, and the administrative examination and approval process is complex. In addition to the low efficiency of examination and approval (generally about half a year), the financing examination and approval generally needs about one to three years. Marles said frankly that the IPO approval has strict requirements on the specific purpose, expected investment time and progress of the raised projects, and the administrative license and the raised investment projects should also be linked compulsively. Therefore, the environmental protection enterprises have a certain degree of development bottleneck in the management of the raised investment projects.

        "At the macro level, the overall scale of China's environmental protection industry is relatively small, the technology is relatively backward, and the development of various fields is not balanced. It is still facing considerable pressure to promote the industrial development through capital operation; at the micro level, the phenomenon of blindly following the trend and chasing hot spots in the current merger and acquisition of environmental protection enterprises is compared