The Rise and Fall of Lenovo's Financial Landscape

Lenovo Holdings, which was once keen on financial business, no longer expects further investment.

Recently, Hankou Bank announced the completion of a capital increase of 4.587 billion yuan, with the targeted issuers being 11 state-owned enterprises in Hubei Province; after the capital increase, Wuhan JinKong under the Wuhan State-owned Assets Supervision and Administration Commission became the largest single shareholder of the bank.

Lenovo Holdings, which actively promoted the IPO of Hankou Bank, has gracefully relinquished its position as the largest shareholder after 15 years.

Sources close to Lenovo Holdings revealed, "This capital increase of Hankou Bank is mainly aimed at local state-owned enterprises, so we did not participate."

The "non-participation" in this capital increase may just be a footnote to Lenovo's shrinking financial landscape in recent years.

Since 2020, Lenovo Holdings has successively exited Suzhou Trust and Huatai Securities.

"The business of Lenovo Holdings is continuously shifting towards technology and real industry," said the aforementioned source close to Lenovo Holdings. "As a private enterprise, the trend in financial business in recent years has definitely been contraction."

At the beginning of this century, Lenovo Holdings first ventured into the financial industry, engaging in VC and PE through Lenovo Investment and Hony Capital; later, it invested in licensed financial institutions such as Suzhou Trust and Hankou Bank, further strengthening its financial investment business.

At its peak, the financial sector, which stood out alone, contributed nearly 60% of Lenovo Holdings' profits, surpassing its IT main business;

Now, with strategic transformation and business adjustments, Lenovo Holdings' financial "ambition" has officially become a thing of the past, and whether investments in cutting-edge fields such as embodied intelligence can become a new beginning remains to be seen.

Shrinking Licensed Landscape

Lenovo Holdings once had a rather long "honeymoon period" with the financial industry.

Since its listing in 2015, Lenovo Holdings' investments have always been driven by both strategic and financial dual engines:

Strategic investments are long-term holdings in growth-oriented targets, subdivided into five categories including IT (Lenovo Group) and finance; financial investments are directed towards high-growth enterprises through its three PE/VC institutions, focusing on financial returns.

At that time, Chairman Liu Chuanzhi expressed a preference for industries with stronger certainty and viewed finance as a core sector to enhance financing capabilities, hoping to accumulate more self-owned funds.

Until 2020, Lenovo Holdings' net profit from financial business fell by 9.7% year-on-year to 1.874 billion yuan, but its contribution to the company's profits still reached 48.45%.

At that time, Lenovo Holdings held licenses for four types of institutions: banking, insurance, securities, and trust.

The investment business also entered a period of brilliance.

Its third-party payment institution Lakala successfully landed on the Shenzhen Stock Exchange's Growth Enterprise Market, Hankou Bank began its IPO sprint after resolving state-owned equity confirmation issues, and Zhengqi Financial successfully transformed into equity investment, achieving five IPOs in a year.

However, not long after, a significant retreat began.

The most notable change was a major strategic adjustment— the year after Ning Min succeeded Liu Chuanzhi as chairman, Lenovo Holdings' business segments were redefined into two categories: industrial operations and industrial incubation and investment:

In the financial business, only Luxembourg International Bank is classified under industrial operations; Lakala, Hankou Bank, and Modern Insurance are all categorized under industrial incubation investment, with specific earnings no longer disclosed.

Under the strategy adjustment centered on industry, Lenovo Holdings is also continuously divesting non-core financial businesses: At the end of 2020, LEGENDHOLDING divested 10% of its stake in Suzhou Trust; two years later, it exited the shareholder ranks of China International Capital Corporation, ending an 18-year holding period.

At the same time, it maintained a conservative attitude towards increasing capital in financial institutions such as Hankou Bank and Minsheng Life Insurance.

The business changes of its subsidiary Zhengqi Financial may provide insight into the changes in LEGENDHOLDING's financial business.

When it attempted to enter the capital market in 2018, Zhengqi Financial had just divested its P2P business, with over 80% of its revenue coming from lending.

From 2015 to 2018, the company's total assets had a compound annual growth rate of 29.0%; from 2015 to 2017, its revenue and profit growth rates were 17.4% and 37.4%, respectively.

Today, Zhengqi Financial has long been renamed "Zhengqi Nengke," and its business has transitioned from lending and equity investment to investment and operation in the new energy industry.

In 2023, the company invested in the construction of a 20GW efficient battery cell intelligent manufacturing industrialization project in Ma'anshan; in 2024, it will start a new strategic cycle to create a new model of "industry + investment and financing."

Unfavorable Timing for Investment

In addition to its layout of licensed institutions, another pillar of LEGENDHOLDING is its investment business.

The most well-known is its early layout in the primary market, including Lenovo Star, Legend Capital, and Hony Capital, three PE/VC institutions.

At the same time, several entities under its umbrella have also actively engaged in equity investment business. For example, Zhengqi Financial once focused its business on equity investment.

Around 2021, when the A-share IPO market was highly active, primary market investments brought considerable returns to LEGENDHOLDING.

In 2020, Zhengqi Financial achieved the listing of five invested companies, including Aikelan, Trina Solar, and Shengxiang Biology, with two companies passing the review, and many companies' listing applications were accepted or prepared for submission.

That year, the scale of the company's equity investment business increased by 34.01% year-on-year, but the increase in fair value changes was 295.48%;

The successful listing of "the first stock in the fight against the epidemic," Shengxiang Biology, once brought nearly 50 times the investment return.

However, the subsequent slowdown in IPOs became a turning point for the investment business.

In 2023, the number of companies going public in the A-share market decreased by 44.50% year-on-year, hitting a nearly four-year low; the amount of financing from initial public offerings dropped by nearly 40%, only 60.75% of that in 2022.

Since that year, Zhengqi Financial has transitioned from industrial investment to industrial operation.

Xinfeng noted that several investments under LEGENDHOLDING faced difficulties in exiting:

For example, Singularity Auto, which fell into bankruptcy liquidation in 2023, had previously received financing from Lenovo Star;

Zongmu Technology, which failed to rush for the Sci-Tech Innovation Board and Hong Kong Stock Exchange in 2022 and is now fully suspending salaries, had also received Series B, C, C+, and D financing from Legend Capital.

"It will definitely be more difficult for IPO projects in recent years," a person close to LEGENDHOLDING told Xinfeng, "For example, funds that originally only did angel investments are now also actively moving towards the middle."

The continued volatility in the capital market has exacerbated performance difficulties.

In 2021, LEGENDHOLDING's profits from industrial incubation and investment shrank by 39% year-on-year, and the following year, it turned from profit to loss, with the loss amount continuing to expand In the first half of 2024, the company's industrial incubation and investment losses expanded by 11.36% year-on-year, reaching 451 million yuan.

Where to Go

In the current context of a shrinking landscape for licensed institutions and declining financial investment returns, the main contributor to LEGENDHOLDING's profits has reverted to the consolidation of Lenovo Group.

In 2021, Lenovo Group's contribution to LEGENDHOLDING was 69.83%; in the subsequent two and a half years, LEGENDHOLDING's overall profits have consistently fallen short of those of Lenovo Group, gradually forming a state of a weak parent and a strong subsidiary.

Insiders close to Lenovo have indicated to Xin Feng that the company's previous diversification investments aimed to spread risk.

In 2017, Liu Chuanzhi expressed a preference for investing in new agricultural foods, innovative service industries, private hospitals, and other sectors to hedge against Lenovo Group's profit risks.

For example, in 2014, LEGENDHOLDING acquired a 51% stake in Baibo Dental, establishing a presence in the dental hospital sector, and three years later, it invested in Sanyu Education, setting up direct-operated kindergartens.

"Projects that were previously viewed favorably have not yielded satisfactory results," said an insider close to Lenovo. "Currently, LEGENDHOLDING's overall investment direction still leans towards technology, AI, and emerging fields."

In recent years, LEGENDHOLDING has shown a clear tendency to align with cutting-edge industries.

In 2020, through Junlian Capital, LEGENDHOLDING invested in Fuhangwei, a company focused on chip design and development in the smart hardware and automotive electronics sectors, aiding its layout in the semiconductor and integrated circuit arena;

The successful listing of Pony.ai on the US stock market in 2024 and the Hong Kong IPO applications of Horizon Robotics and Black Sesame, among other "unicorns," also have LEGENDHOLDING's involvement behind them.

Especially in the field of embodied intelligence, by the end of 2024, LEGENDHOLDING had invested in over 20 related enterprises, covering niche areas such as humanoid robots, robotic arms, unmanned forklifts, and chassis.

For instance, "XSquare," which focuses on the research and development of "general-purpose embodied large models" aimed at building a general brain-cerebellum system for robots, had LEGENDHOLDING's involvement in its angel round financing in 2024 and Pre-A++ round financing in 2025;

The research company Star Motion Era, dedicated to creating native general-purpose embodied intelligent agents, received angel round financing led by Lenovo Ventures in 2024;

Zhi Ji Power's Pre-A financing in 2023 and A+ round financing in 2025 also saw participation from Lenovo Ventures.

Wang Guangxi, Vice President of Lenovo Group and partner at Lenovo Ventures, has stated that there are significant opportunities for embodied intelligence in China.

"The robotics field is very similar to the automotive sector," Wang Guangxi said. "Traditional robots are like the era of gasoline cars, where Europe, America, and Japan have built a complete industrial system, ecosystem, and even industry standards; embodied intelligence will be like smart cars, becoming an opportunity for China to achieve a leapfrog development."

However, the aforementioned investments have yet to generate scaled revenue and cash flow, as reflected in the financial reports.

With the development of cutting-edge technologies and expectations for AI investments in industrial applications, whether LEGENDHOLDING can achieve substantial returns in the future remains to be seen