China’s top-ranking Tsinghua University will hand over its investment conglomerate to a state-owned asset watchdog in southwestern Sichuan province, according to a corporate filing from one of its publicly listed subsidiaries, after an aggressive expansion in the semiconductor industry overburdened the company with debt . Tsinghua Holdings, which is 100 per cent owned by President Xi Jinping’s alma mater, will be transferred to the Sichuan State-owned Assets Supervision and Administration Commission for free, its subsidiary Unisplendour said in a stock filing to the Shenzhen Stock Exchange on Tuesday. The provincial government agency will then transfer the assets to Sichuan Energy Industry Investment Group (SCEI), a state-owned enterprise under its control. The disclosure is a slight deviation from a plan announced at the end of 2021 that said SCEI would directly take over Tsinghua Holdings. Semiconductor firm Tsinghua Unigroup gets green light for debt restructuring “The transfer to SCEI marks a major part of the government’s shake-up of university-related enterprises after years of debt-fuelled expansion,” said Liu Guohong, chairman at Shenzhen Fuwei Funds, adding that Sichuan’s state asset watchdog would have to shoulder Tsinghua’s bad debts. Sichuan state-backed funds have been aggressive bidders for hi-tech assets among provincial-level state funds such as those in Anhui, Shenzhen and Beijing, according to Liu. Sichuan’s funds carry a mandate to support the development of local hi-tech industries. “It’s possible for Sichuan to relocate some of the projects to Sichuan afterwards,” he said. The deal, which is awaiting regulatory approval, is part of China’s ongoing campaign to get the country’s universities to divest their investment arms after suffering a slew of problems from poor internal governance to a lack of sufficient supervision. Chinese universities are exclusively state owned and follow Communist Party directives. In a government policy paper published in 2018, these entities are blamed for creating significant risks for “university asset security and the sustainable operation of universities”. Tsinghua Holdings, which was incorporated in 2003 by pooling together 29 commercial operations owned by Tsinghua University, is one of the most powerful school-affiliated enterprises in China, with one of the more extraordinary corporate expansion stories. From the end of 2011 through 2018, the group’s total assets ballooned from 59 billion yuan (US$9.3 billion) to 517 billion yuan amid a surge of debt-financed acquisitions by subsidiaries, according to the company’s corporate bond statements filed with the Shanghai Stock Exchange. This included the semiconductor subsidiary Tsinghua Unigroup. The group’s asset size started to shrink as Beijing moved to curb the power of murky financial conglomerates. As with private financial empires, including Tomorrow Group under Xiao Jianhua and Anbang Group controlled by Wu Xiaohui , the business groups of China’s top schools also proved to be rampant with corruption and money-power deals. Founder Group, affiliated with Peking University, entered restructuring last year after a slew of controversies and corruption cases. By the end of June 2021, Tsinghua Holdings’ assets had shrunk to 61 billion yuan, according to a bond report with the Shanghai exchange. Tsinghua Unigroup – considered the jewel in the conglomerate’s crown, which was known for snatching up chip assets and once flirted with buying Taiwan Semiconductor Manufacturing Co – filed for bankruptcy last year . In a restructuring plan of Unigroup approved by a Beijing court, Tsinghua Holdings and Beijing Jiankun Investment Group will give up ownership to a consortium led by private buyout fund Wise Road Capital and its sister fund JAC Capital at a price of 60 billion yuan in cash. The transfer of Tsinghua Holdings will not affect Unigroup’s debt restructuring plan, according to Unisplendour’s filing. There is currently no public information on when the Sichuan State-owned Assets Supervision and Administration Commission will take control of Tsinghua Holdings, whose portfolio still includes the school’s publishing house, according to the company’s website.