Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 8 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) ACQUISITIONS AND DISPOSALS OF INVESTMENTS (CONTINUED) On 3 November 2021, the Fund entered into an equity transfer agreement in relation to Anhui iFlytek Healthcare Information Technology Co., Ltd. (“ iFlytek Healthcare ”), pursuant to which the Fund agreed to acquire a 0.714% equity interest in iFlytek Healthcare from an existing shareholder, Anhui iflytek Venture Capital LLP, at a price of RMB50 million. The Fund paid the consideration of RMB50 million (equivalent to US$7.80 million) for the transfer on 12 November 2021. After completion of the transfer, the Fund’s stake in iFlytek Healthcare increased from 3% to 3.714%. On 10 November 2021, the Fund entered into an investment agreement and other relevant agreements in relation to Rizhao Azuri Technologies Co., Ltd. (“ Azuri ”), pursuant to which the Fund agreed to contribute capital of RMB30 million to Azuri in order to participate in its new round of financing and to obtain a 2.50% equity interest. The Fund paid and completed a capital contribution of RMB30 million (equivalent to US$4.72 million) to Azuri on 9 December 2021. Azuri is a company that develops and manufactures laser diode chips, optical devices and optical module products for high-speed optical communications, mainly targeting fiber to the home (FTTH), 5th generation mobile communications (5G), enterprise networking and data centre markets. In addition, the Fund exited from a convertible debt project and an equity investment project during the year. The Fund reached a decision to recall the loan to Rong Bao Zhai Culture Co., Ltd. (“ Rong Bao Zhai Culture ”) in the fourth quarter of 2020. As of 28 June 2021, the Fund received the full amount of the loan principal of RMB300 million plus accrued interest of RMB26.49 million (equivalent to US$50.09 million) from Rong Bao Zhai Culture, and officially exited from the investment. The pre-tax internal rate of return to the Fund from Rong Bao Zhai Culture was 3.57%. During the period of July to December 2021, the Fund sold its entire holding of 0.823 million shares of Cambricon Technologies Corporation Limited (“ Cambricon ”) on the secondary market through a partnership entity, for net proceeds of RMB80.60 million (equivalent to US$12.66 million), and has fully exited from the project. The pre-tax internal rate of return to the Fund from Cambricon was 20.83%. LIQUIDITY, FINANCIAL RESOURCES, GEARING AND COMMITMENTS The Fund’s cash and cash equivalents decreased by 39.30%, from US$60.36 million at the end of last year to US$36.64 million (representing 3.60% of the Fund’s total assets) as of 31 December 2021, due mainly to payments made by the Fund for the Investment Manager’s performance fee and the special dividend for 2020. As of 31 December 2021, the Fund had no outstanding bank loans (31 December 2020: Nil). As of 31 December 2021, the Fund had commitment of US$1.96 million (31 December 2020: US$5.01 million) for an investment that was approved but not yet provided for in the financial statements—specifically, for future payments related to investment in CASREV FUND III-RMB L.P.