Announcement on the Selection of Management Institutions for the Sub-Fund of Wuxi Low-Altitude Economy and Aerospace Industry Special Master Fund of Jiangsu Zhanxin Master Fund

　　In order to implement the deployment requirements of the Jiangsu Provincial Party Committee and Provincial Government, leverage the role of long-term capital, patient capital, and strategic capital, promote the development of strategic emerging industries in Jiangsu Province, and strive to build an important platform for developing new productive forces, the Jiangsu Provincial Strategic Emerging Industries Master Fund (hereinafter referred to as the "Provincial Master Fund") and Wuxi City jointly established the Jiangsu Wuxi Low-altitude Economy and Aerospace Industry Special Master Fund (Limited Partnership) (hereinafter referred to as the "Industry Special Master Fund"), with a scale of 2 billion yuan. Now, we are openly selecting management institutions for the industry sub-funds. The relevant matters are announced as follows:

I. Basic principles for selection

　　(I)  Principle of fairness, impartiality, and openness. The selection process should be conducted in accordance with unified selection rules, selection criteria, and scoring standards to ensure equal opportunities for all candidate management institutions under the same conditions.

　　(II)Principle of compliance with laws and regulations. The selection process shall strictly adhere to national laws and regulations, industry supervision requirements, and relevant policies and provisions, and carry out the selection of fund management institutions in accordance with the law and regulations.

　　(III)Follow the principle of market rules. Follow market rules, broaden selection channels, and choose high-quality fund management institutions that match the fund investment direction, have excellent management qualifications, strong management capabilities, and rich investment experience to cooperate with.

II. Basic Information of the Specialized Industry Fund of Funds

　　(I) Fund positioning

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

　　(II) Organizational form

Limited partnership.

  　  (III) Registered address

Wuxi City, Jiangsu Province.

  　  (IV) Duration

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

   　 (V) Capital contribution structure

The total scale is 2 billion yuan, including:

1. The provincial-level fund of funds will contribute 500 million yuan, accounting for 25% of the total;

　2. Wuxi Zhanxin Private Equity Fund Management Co., Ltd. contributed 20 million yuan, accounting for 1% of the total.

　　(VI) Investment Model

          1.Investment methods include investing through the establishment of industry sub-funds or directly investing in projects. The amount of direct investment in projects generally does not exceed 30% of the actual investment amount of the industry-specific master fund.

          2. The subscribed capital contribution ratio of the industry-specific master fund in the industry sub-fund shall not exceed 30% of the scale of the industry sub-fund, and the investment amount for a single direct investment project shall not exceed 20% of the total paid-in capital contribution of the industry-specific master fund.

　　(VII) Investment Direction

　　We will make layouts centered around the direction of new productive forces, with a focus on related links in the industrial chain such as low-altitude economy, commercial aerospace, aircraft supporting design, manufacturing, equipment, materials, and system integration. Our main investments will be in low-altitude economy complete aircraft manufacturing, flight control systems, composite materials, sensors, battery systems, etc.; aviation materials, aviation components, aviation engine manufacturing, etc.; and enterprises in related industrial chains such as rocket engines, rocket materials, satellite payloads, and complete satellite systems.

III. Requirements for the establishment of industry sub-funds

      (I) Basic requirements

         1.The raising, establishment, and investment operations of industry sub-funds shall comply with the relevant laws, regulations, and self-regulatory rules of the industry;

         2. The industrial sub-fund shall be filed with the Asset Management Association of China (AMAC) for product registration in accordance with regulations, and operate in accordance with laws and regulations;

        3. The industry sub-fund directly invests in targets that meet the relevant requirements, such as the investment direction of the industry-specific master 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 contribution ratio of governments at all levels shall not exceed 50%;

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

        (II) Duration

In principle, it should not exceed 10 years.

       (III) Investment regions

1. The amount of direct investment in enterprises within Jiangsu Province shall not be less than the total amount of contributions from governments at all levels, and its proportion in the total direct investment shall not be less than 70%. During the duration of the fund, if any of the following conditions is continuously met, it can be identified as investing in enterprises within Jiangsu Province:

   
   

      (1) Enterprises directly registered within Jiangsu Province;

     (2) Enterprises that relocate their registered locations to within Jiangsu Province after investment (the relocation of registered location occurs during the fund's duration);

     (3) Enterprises that have established their main production and R&D bases in Jiangsu Province through the establishment of subsidiaries (with substantial business activities);

     (4) Enterprises acquired by registered enterprises within Jiangsu Province (holding-type acquisitions, and included in the scope of consolidated statements);

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

   2. The amount invested by the industrial sub-fund in enterprises within Wuxi shall not be less than 1.5 times the actual capital contribution of the industrial special master fund. During the fund's duration, if any of the following conditions is continuously met, it can be deemed as an investment in enterprises within Wuxi:

      (1) Enterprises directly registered within Wuxi city;

     (2) Enterprises that relocate their registered address to Wuxi city after investment;

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

    (4) Enterprises acquired by enterprises registered in Wuxi City (holding-type acquisitions, and included in the scope of consolidated statements);

    (5) During the duration of the sub-fund, enterprises within Wuxi invested by its affiliated funds (funds managed by the same management institution or the same actual controller), or enterprises outside Wuxi that have moved their registered address to Wuxi (this return investment can only be counted once and shall not be repeatedly calculated in multiple funds);

     (6) Other circumstances that can be identified as investing in enterprises within Wuxi city.

     3. In principle, no investment shall be made in overseas projects. If there is a genuine need to invest in overseas projects, the industry sub-fund management institution shall conduct strict review and fully demonstrate the necessity, compliance, and fund security measures for the outflow of funds.

      (IV) Management fee

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

    2. Exit stage: not exceeding 1.5% per year of the initial investment cost of the unexited project;

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

    4. Establish a mechanism for retroactive adjustment of management fees. Upon the expiration of the investment period, any uninvested funds of the fund should be refunded and treated as capital reduction. Any excess fund management fees collected should be promptly refunded or retained as a credit against the fund management fees for the withdrawal period.

      (V) Threshold returns and performance-based compensation

　　The hurdle rate shall not be lower than 5% annualized, and the management institution's performance compensation shall not exceed 20% of the excess return.

      (VI) Negative list

　　The industrial sub-fund shall not engage in the following businesses:

1. Engaging in businesses such as guarantees, mortgages, and entrusted loans;

   
   

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

　3. Providing sponsorship or donation to any third party．

　4. Absorbing deposits, either directly or in a disguised form, or providing loans and interbank lending to third parties;

　5. Conducting foreign investments that bear unlimited joint and several liability;

　6. Raising funds in violation of regulations through issuing trust or collective financial products;

　7. "Equity in name, debt in reality" and "Fund in name, reserve in reality";

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

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

　10. Other businesses prohibited by national laws and regulations.

       (VII) Management and operation requirements

　　The management and operation of the industrial sub-fund should comply with the relevant requirements of the provincial government's investment fund management system and the provincial-level master fund management system, and should implement the following management requirements:

1. The industry-specific master fund management institution shall compile an investment field catalog under the guidance of Jiangsu High-tech Venture Capital and Strategic New Private Equity Fund Management Co., Ltd. (hereinafter referred to as the provincial master fund management institution), and the industry sub-fund shall conduct investments in accordance with the investment field catalog;

   
   

　2. The management institution of the industry-specific fund of funds shall appoint one member to the investment decision-making committee of the industry sub-fund;

　3. If the total investment amount of the proposed investment projects of the industrial sub-fund reaches 5 billion yuan or more, the management institution of the industrial sub-fund shall report it as a major matter to the provincial parent fund management institution for pre-review, which will focus on policy objectives, investment fields, project risks, etc. All investment projects of the industrial sub-fund shall be reviewed by the provincial parent fund management institution to ensure compliance with the investment field catalogue;

　4. The industry sub-fund should choose a commercial bank with custody qualifications as the custodian institution, which shall be publicly selected and approved by the meeting of the industry sub-fund partners (shareholders) before taking effect; the custodian bank should be one of the domestic systemically important banks (or their branches) newly recognized by the People's Bank of China and the National Financial Regulatory Administration, and the industry sub-fund custodian bank account must be directly connected to the provincial-level parent fund investment management system;

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

　6. The management institution of the industry-specific master fund shall conduct annual assessment and evaluation of the industry sub-funds. The actual management fee accrued for the industry sub-funds each year shall be 80% of the amount that should be accrued for that year. Of the remaining 20%, 10% of the amount that should be accrued each year shall be linked to the assessment and evaluation results of that year, and no accrual shall be made if the assessment and evaluation grade for that year is poor. The other 10% shall be accrued in full at the time of fund liquidation, and no accrual shall be made if the principal is not fully recovered at the time of fund liquidation. The specific measures for implementing the assessment and evaluation shall be formulated separately by the management institution of the industry-specific master fund;

　7. The management institutions of industry-specific master funds shall conduct annual and special supervision and inspections on industry sub-funds, and provincial-level master fund management institutions may conduct comprehensive reviews or spot checks.

IV. Application requirements for management institutions and management teams

　　(I) Requirements for management institutions

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

          1.It should be registered with the Asset Management Association of China;

         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-stage investment institutions, venture capital institutions, private equity investment institutions, or state-owned investment institutions in authoritative rankings such as Zero2IPO, ChinaVenture, and ChinaVenture Finance in the past three years), or a leading institution in a specific industry sector (having been ranked among the top 50 in industry-specific rankings such as Zero2IPO, ChinaVenture, and ChinaVenture Finance);

　　3. Registered in Chinese Mainland, the paid-in registered capital should not be less than 10 million RMB and should match the scale of the fund being managed;

　　4. For industrial sub-funds adopting a limited partnership structure, the capital contribution ratio shall not be less than 1% of the fund's subscribed scale and shall not be less than RMB 5 million;

　　5. Possess strong fundraising capabilities 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, and at least 10 of the enterprises directly invested by the fund have exited through IPO, mergers and acquisitions, equity transfers, etc., while maintaining or increasing their value;

　　6. Have a professional and stable team. Among the full-time staff of the institution, there should be at least 10 individuals dedicated to investment business, among whom at least 5 possess over 5 years of experience in equity investment fund management, demonstrating good professional ethics and credibility. The institution should have a fixed place of business and software and hardware facilities suitable for its business operations;

　　7. Possess sound corporate governance and internal control management systems. Have standardized project selection mechanisms, investment decision-making mechanisms, incentive and restraint mechanisms, risk control mechanisms, financial management mechanisms, etc;

　　8. The management organization and core management team members have no adverse records of punishment by financial regulatory authorities or judicial authorities, and no serious dishonesty records.

　　After being selected as the sub-fund management institution through the selection process, the sub-fund management institution shall not arbitrarily change its equity structure, core management team, or management personnel. If any adjustments are indeed necessary, it shall report in writing to the industry-specific master fund management institution within 5 working days from the date of making the adjustment decision. In the event of any significant adverse adjustments, the industry-specific master fund management institution has the right to reselect or change the management institution.

      (II) Requirements for the management team

       1.Equipped with a dedicated management team of no fewer than 5 members, who shall possess relevant professional qualification certificates, have investment experience in relevant fields, and have worked in the reporting institution for no less than 3 years;

　　2. The core members of the dedicated management team (the person appointed to the industry sub-fund and the members of the investment committee) should all have over 5 years of experience in equity investment management, and at least 3 of them should have management experience in the entire process of "raising, investing, managing, and exiting" fund products with the same nature as the industry-specific master fund at the reporting institution. The fund products with the same nature as the industry-specific master fund refer to equity investment funds with the same or similar investment directions;

　　3. The management organization must ensure the stability of core members. The fund agreement must lock in the core members of the fund investment decision-making committee and the management team. Any changes to the locked-in personnel must be approved by the fund partners (shareholders) meeting or other relevant fund authorities through voting;

　　4. The historical performance of core members must be ensured to be authentic and verifiable. Core members should have served as key personnel or members of the investment decision-making committee or designated representatives in relevant funds, or as senior management personnel responsible for investment business in the reporting institutions and the managers of relevant funds;

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

　　6. The management team must establish a risk-benefit alignment mechanism within the industry sub-fund.

　　V. Selection Procedure

　　The management institution of the industrial sub-fund shall be publicly selected by the management institution of the industrial special master fund.

　　The selection process includes:

　　(1) Issue an announcement;

　　(II) Preliminary review of materials. Conduct a preliminary review of the completeness of application materials, comprehensiveness of content, feasibility of the plan, etc., eliminate application plans that do not meet basic requirements, and determine the list of preliminary selected institutions;

　　(III) Due diligence. Conduct due diligence on the pre-selected institutions, focusing on comprehensive verification of important information such as management institution registration and filing, historical business, organizational structure, professional operation, investment decision-making, post-investment management, risk control, finance, legal affairs, and business;

　　(4) Expert review. Organize a review panel of experts to conduct a comprehensive review of the application materials submitted by the management institutions. Through listening to due diligence reports, on-site inquiries with the applicant institutions, and other methods, make comprehensive judgments and scoring to determine the list of candidate management institutions;

　　(V) Decision-making process. The industry-specific fund of funds management institution will determine the selection results after fulfilling the decision-making process;

　　(VI) Result publicity. The selection results shall be publicized to the public for no less than 5 working days.

VI. Application method

　　(1) Please carry out the application process for industrial sub-fund management institutions in accordance with the requirements outlined in this announcement, and prepare detailed application materials in accordance with the requirements outlined in the annex.

　　(２) The application materials shall be compiled into a unified volume. For detailed requirements regarding stamping, format, cover, and binding, please refer to the annex.

　　(３) The application materials should be compiled in triplicate and submitted to Wuxi Innovation Investment Group Co., Ltd. (address: 25th Floor, Building 10, Jinrong 1st Street, Binhu District, Wuxi City, Jiangsu Province). Please send both the scanned copy with seal and the Word electronic version of the application materials compilation to the email simultaneously

wxzx@wuxicapital.com.cn

Contact: Management 0510-83692288

Explanation of Application Materials for the Industrial Sub-Fund Management Institution of Jiangsu Wuxi Low-Altitude Economy and Aerospace Industry Special Master Fund (Limited Partnership).docx

Jiangsu Wuxi Low-altitude Economy and Aerospace Industry Special Master Fund (Limited Partnership)

March 20, 2025