Announcement on the Selection of Management Institution for the Industrial Sub Fund of Jiangsu Wuxi Integrated Circuit Industry Special Fund of Funds (Limited Partnership) of Jiangsu Province Strategi

　　In order to implement the deployment requirements of the Jiangsu Provincial Party Committee and Government, leverage the role of long-term capital, patient capital, and strategic capital, promote the development of strategic emerging industries in Jiangsu Province, and focus on creating an important battlefield for the development of new quality productivity, the Jiangsu Province Strategic Emerging Industries Fund of Funds (hereinafter referred to as the Provincial Fund of Funds) and Wuxi City jointly invested to establish the Jiangsu Wuxi Integrated Circuit Industry Special Fund of Funds (Limited Partnership) (hereinafter referred to as the Industry Special Fund of Funds), with a scale of 5 billion yuan. The selection of the management institution for the industrial sub fund is now open, and the relevant matters are announced as follows:　

1、 Basic principles of selection

　（1） The principle of fairness, impartiality, and openness. According to the unified selection work rules, selection criteria, and scoring standards, the evaluation and review shall be conducted to ensure equal opportunities for all management agencies under equal conditions.

　（2） The principle of following laws and regulations. The selection process strictly follows national laws and regulations, industry regulatory requirements, and relevant policy provisions, and carries out the selection of fund management institutions in accordance with laws and regulations.

　（3） Adhere to the principles of market rules. Following market rules, expanding selection channels, and choosing high-quality fund management institutions that match the investment direction of the fund, have excellent management qualifications, strong management capabilities, and rich investment experience for cooperation.

2、 Basic Information of Industrial Special Fund of Funds

　（1） Fund positioning

　　Intended to support Wuxi in promoting the integrated development of strategic emerging industry clusters and optimizing the layout of local modern industrial systems.

　（2） Organizational form

　　Limited partnership system.

　（3） Registered address

　　Wuxi City, Jiangsu Province.

　（4） Duration of existence

　　The duration is 15 years, including an investment period of 8 years and an exit period of 7 years.

　（5） Capital structure

　　The total scale is 5 billion yuan, including:

1. Provincial parent fund contributed 1.25 billion yuan, accounting for 25%;

   
   

　2. Wuxi Innovation Investment Group Co., Ltd. invested 700 million yuan, accounting for 14%;

　3. Wuxi Xichuang Juli Equity Investment Partnership Enterprise (Limited Partnership) contributed 2 billion yuan, accounting for 40%;

　4. Wuxi Industrial Development Group Co., Ltd. invested 1 billion yuan, accounting for 20%;

　5. Wuxi Zhanxin Private Equity Fund Management Co., Ltd. contributed 50 million yuan, accounting for 1%.

　（6） Investment Model

1. The investment methods include setting up industrial sub funds for investment or directly investing in projects, with the amount of direct investment projects generally not exceeding 30% of the actual investment amount of the industrial special parent fund.

   
   

　2. The subscribed capital ratio of the industrial special parent fund in the industrial sub fund shall not exceed 30% of the scale of the industrial sub fund, and the investment amount of a single direct investment project shall not exceed 20% of the total paid in capital of the industrial special parent fund.

　（7） Investment direction

　　Mainly investing in specialized equipment and materials for integrated circuits, research and design of high-end general-purpose chips, silicon optical chips, quantum chips, third-generation semiconductors, high-end power semiconductors, EDA and other fields. We will invest in the integrated circuit industry in the 13 emerging industries identified in our province's "1650" industrial system, "51010" strategic emerging industry cluster, and the "Action Plan for Building a Global Influential Industrial Technology Innovation Center". We will adhere to the principles of "investing early, investing small, and investing in science and technology", and promote the strengthening, supplementation, and extension of the industrial chain.

　　3、 Requirements for the establishment of industrial sub funds

　　（1） Basic requirements

1. The fundraising, establishment, and investment operation of industrial sub funds shall comply with relevant laws, regulations, and self regulatory rules of the industry;

   
   

　2. The industrial sub fund shall register its products with the China Fund Association in accordance with regulations and operate in accordance with laws and regulations;

　3. The industrial sub fund directly invests in targets that meet the investment direction and other relevant requirements of the industrial special parent fund;

　4. The industrial sub fund shall be registered within Jiangsu Province;

　5. The scale of the industrial sub fund shall not be less than 500 million yuan, and in the southern Jiangsu region, it shall not be less than 1 billion yuan. The total proportion of government investment at all levels shall not exceed 50%;

　6. Other requirements stipulated by laws, regulations, and policies.

　（2） Duration of existence

　　In principle, it should not exceed 10 years.

　（3） Investment Region

1. The amount of direct investment in enterprises within Jiangsu Province shall not be less than the total investment amount of governments at all levels, and the proportion of direct investment in the total amount shall not be less than 70%. Can be identified as investing in enterprises within Jiangsu Province:

   
   

　　(1) Directly register enterprises within Jiangsu Province;

　　(2) Enterprises that relocate their registered address to Jiangsu Province after investment (the relocation of registered address occurs during the duration of the fund);

　　(3) Enterprises that have established their main production and research and development bases in Jiangsu Province through the establishment of subsidiary enterprises (with substantial business activities);

　　(4) Enterprises acquired by registered enterprises within Jiangsu Province (controlled acquisitions and included in the scope of consolidated financial statements);

　　(5) Other investments that can be recognized as investments in enterprises within Jiangsu Province.

　　2. The investment amount of the industrial sub fund in projects within Wuxi city shall not be less than 1.5 times the actual investment amount of the industrial special parent fund. During the term of the fund, if the following conditions are continuously met, it can be recognized as investing in enterprises in Wuxi, Jiangsu Province:

　　(1) Enterprises registered directly in Wuxi, Jiangsu Province;

　　(2) Enterprises that relocate their registered address to Wuxi City, Jiangsu Province after investment (the relocation of registered address occurs during the fund's existence period);

　　(3) Enterprises that have established their main production and research and development bases in Wuxi, Jiangsu Province through the establishment of subsidiary enterprises (with substantial business activities);

　　(4) Enterprises acquired by registered enterprises in Wuxi, Jiangsu Province (holding type acquisition and included in the scope of consolidated financial statements);

　　(5) Other enterprises that can be identified as investments in Wuxi, Jiangsu Province.

　　3. In principle, we do not invest in overseas projects. If it is necessary to invest in overseas projects, the management institution of the industrial sub fund shall strictly review and fully demonstrate the necessity, compliance, and security measures for capital outflow.

　（4） Management fee

1. Investment period: not exceeding 1.5% of the fund's actual paid in size per year;

   
   

　2. Exit period: not exceeding 1.5% of the initial investment cost of the project that has not been exited per year;

　3. Extension period and liquidation period: no management fee will be charged;

　4. Establish a mechanism for retrospective adjustment of management fees. Upon the expiration of the investment period, the funds that have not been invested by the fund should be returned and reduced. Any excess fund management fees collected should be promptly refunded or retained as a deduction for the fund management fees during the exit period.

　（5） Threshold income and performance compensation

　　The threshold return rate shall not be less than 5% annualized, and the performance compensation of the management institution shall not exceed 20% of the excess return.

　（6） Negative List

　　Industrial sub funds shall not engage in the following businesses:

1. Engage in guarantee, mortgage, entrusted loan and other businesses;

   
   

　2. Investing in secondary market stocks (excluding participating in targeted issuance of listed companies), futures, real estate, securities investment funds, corporate bonds, trust products, wealth management products, insurance plans, and other financial derivatives;

　3. Provide sponsorship or donations to any third party;

　4. Absorbing or indirectly absorbing deposits, or providing loans and fund lending to third parties;

　5. Make external investments with unlimited joint and several liability;

　6. Illegally raising funds through issuing trusts or collective wealth management products;

　7. 'Famous stocks and real bonds',' Famous funds and real reserves';

　8. Investing in projects that are prohibited, restricted, or do not comply with relevant national industrial policies;

　9. Using fund investment as a preferential condition for attracting investment;

　10. Other businesses prohibited by national laws and regulations.

　（7） Management operation requirements

　　The management and operation of industrial sub funds should be in accordance with the relevant requirements of the provincial government investment fund management system and the provincial parent fund management system, and the following management requirements should be implemented:

1. Under the guidance of Jiangsu Gaotou Zhanxin Private Equity Fund Management Co., Ltd. (hereinafter referred to as the provincial-level parent fund management institution), the management institution of the industrial special parent fund shall compile an investment field directory, and the industrial sub fund shall carry out investments in accordance with the investment field directory;

   
   

　2. The management institution of the industrial special parent fund shall appoint one member to the investment decision-making committee of the industrial sub fund;

　3. If the total investment amount of the industrial sub fund's proposed investment project reaches 5 billion yuan or more, the management institution of the industrial sub fund should report it as a major matter to the provincial parent fund management institution for pre review, with a focus on policy objectives, investment areas, project risks, etc. All investment projects of the industrial sub fund must be reviewed by the provincial parent fund management agency to ensure compliance with the investment field directory;

　4. The industrial sub fund shall choose a commercial bank with custody qualifications as the custodian institution. The custodian institution shall be selected through public selection and shall come into effect after being reviewed and approved by the partners (shareholders) meeting of the industrial sub fund; The custodian bank shall be one of the domestic systemically important banks (or its branches) newly recognized by the People's Bank of China and the State Financial Supervision and Administration, and the industrial sub fund custodian bank account must be directly connected to the provincial master fund investment management system;

　5. The management institution of the industrial sub fund shall regularly update the investment operation of the fund in the provincial parent fund investment management information system and the digital system of Wuxi Innovation Investment Group Co., Ltd;

　6. The management institution of the industrial special parent fund conducts annual assessment and evaluation of the industrial sub fund. The actual annual provision of management fees for the industrial sub fund is 80% of the accrued amount for the current year. Among the remaining 20%, 10% of the accrued amount for each year is linked to the assessment and evaluation results for the current year. Those with poor assessment and evaluation levels for the current year will not be provisioned; Another 10% will be accrued in a lump sum during fund liquidation, and no provision will be made for those whose principal has not been fully recovered during fund liquidation. The specific implementation methods for assessment and evaluation shall be separately formulated by the management institution of the industrial special parent fund;

　7. The management institution of the industrial special parent fund conducts annual and special supervision inspections on the industrial sub funds, and the provincial parent fund management institution may conduct comprehensive reviews or spot checks.

　　4、 Declaration requirements for management institutions and teams

　　（1） Regulatory requirements

　　The relevant standards for selecting management agencies shall not be lower than the following conditions:

1. Should be registered with the China Securities Investment Fund Industry Association;

   
   

　2. In principle, it should be a leading institution in the private equity and venture capital industry (having been ranked among the top 50 early 　investment institutions, venture capital institutions, private equity investment institutions, or state-owned investment institutions in authoritative rankings such as Qingke, Zhongtou, and Rongzhong in the past three years), or a leading institution in a segmented industry field (among the top 50 segmented industry rankings such as Qingke, Zhongtou, and Rongzhong);

　3. Registered in Chinese Mainland, the paid in registered capital should not be less than 10 million yuan and should match the size of the fund under management;

　4. The contribution ratio of the industrial sub fund adopting a limited partnership system shall not be less than 1% of the subscribed capital of the fund and not less than 5 million yuan;

　5. Having good fundraising ability and exit performance. In principle, the scale of private equity and venture capital funds managed by institutions should not be less than 5 billion yuan. At least 10 of the fund's direct investment enterprises have exited and achieved value preservation and appreciation through IPO, mergers and acquisitions, equity transfer, and other means;

　6. Having a professional and stable team. At least 10 full-time staff members of the institution are dedicated to investment business, among whom at least 5 have more than 5 years of experience in equity investment fund management, with good professional ethics and reputation. Having a fixed place of business and software and hardware facilities suitable for its business;

　7. Having a sound corporate governance and internal control management system. There are standardized project selection mechanisms, investment decision-making mechanisms, incentive and constraint mechanisms, risk control mechanisms, financial management mechanisms, etc;

　8. The management organization and core management team members have no negative records of being punished by financial management departments or judicial authorities, and have no serious records of dishonesty.

　　After being selected as the sub fund management institution through the selection process, the sub fund management institution shall not arbitrarily change the equity and core management team or management personnel. If any adjustment is necessary, it shall be reported in writing to the management institution of the industrial special fund within 5 working days from the date of the adjustment decision. If there are significant adverse adjustments, the management institution of the industrial special parent fund has the right to re select or change the management institution.

　（2） Management team requirements

　　１.　Equipped with a dedicated management team of no less than 5 people, members should have relevant professional qualifications and investment experience in the relevant field, and have worked in the applying institution for no less than 3 years;

　　2. The core members of the dedicated management team (appointed to the head of the industrial sub fund and members of the investment committee) should all have more than 5 years of experience in equity investment management, and at least 3 people should have management experience in the entire process of "fundraising, investment, management, and withdrawal" of fund products of the same nature as the industrial special parent fund in the applying institution. The fund products with the same nature as the industrial special parent fund mentioned above refer to equity investment funds with the same or similar investment direction;

　　3. The management institution must ensure the stability of the core members, and the fund agreement must lock in the members of the fund investment decision-making committee and the core personnel of the management team. If there are any changes in the locked personnel, they must be voted and approved by the fund's relevant authorities such as the fund partner (shareholder) meeting;

　　4. The historical performance of core members shall be ensured to be true and verifiable. Core members shall have served as key personnel or members of investment decision-making committees or appointed representatives in relevant funds, or as senior management personnel responsible for investment business in the reporting institution and relevant fund managers;

　　5. Before the completion of 70% of the investment progress of the industrial sub fund, core members shall not raise or manage other funds with the same investment field, investment region, and investment stage;

　　6. The management team must establish a risk benefit binding mechanism in the industrial sub fund.

　　5、 Selection Procedure

　　The management institution of the industrial sub fund is publicly selected by the management institution of the industrial special parent fund.

The selection process includes:

　　（1） Publish an announcement;

　　（2） Preliminary review of materials. Conduct a preliminary review of the completeness, comprehensiveness, and feasibility of the application materials, exclude application plans that do not meet basic requirements, and determine the list of preliminary institutions;

　　（3） Due diligence. Conduct due diligence on the initial selection institutions, focusing on comprehensive verification of important information such as registration and filing of management institutions, historical business, organizational structure, specialized operations, investment decision-making, post investment management, risk control, and finance, legal, and business;

　　（4） Expert review. Organize a review expert group to comprehensively review the application materials of the management institution, conduct comprehensive judgment and scoring through listening to due diligence reports, on-site inquiries from the application institution, etc., and determine the list of candidate management institutions;

　　（5） Decision making process. The management institution of the industrial special parent fund shall determine the selection results after completing the decision-making process;

　　（6） Result announcement. The selection results shall be publicly announced to the public for no less than 5 working days.

　　6、 Declaration method

　　（1） Please carry out the application work for the management institution of the industrial sub fund in accordance with the requirements of this announcement, and prepare detailed application materials according to the requirements in the attachment.

　　（2） The application materials shall be compiled into a unified volume, and the requirements for printing, format, cover, and binding are detailed in the attachment.

　　（3） Three copies of the compilation of application materials shall be submitted to Wuxi Innovation Investment Group Co., Ltd. (Address: 25th Floor, Building 10, Financial 1st Street, Binhu District, Wuxi City, Jiangsu Province). Please send the scanned copy and Word electronic version of the application materials compilation to your email simultaneously wxzx@wuxicapital.com.cn .

Contact: Manager 0510-83692288

Explanation of Application Materials for the Industrial Sub Fund Management Institution of Jiangsu Wuxi Integrated Circuit Industry Special Fund of Funds (Limited Partnership). docx