Guotai Junan Securities : CONNECTED TRANSACTION - PARTICIPATION IN AN INVESTMENT FUND

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

GUOTAI JUNAN SECURITIES CO., LTD.

國泰君安証券股份有限公司

(A joint-stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 02611)

CONNECTED TRANSACTION

PARTICIPATION IN AN INVESTMENT FUND

We refer to the announcement of the Company dated 30 October 2017, in relation to the Company's participation in the Investment Fund (Phase I) as a limited partner.

The Board is pleased to announce that on 28 April 2021 it approved Guotai Junan Zhengyu, a wholly-owned subsidiary of the Company, to enter into the Fund LP Agreement (Phase II) to participate as a limited partner in the Investment Fund (Phase II), which is the second phase of the Shanghai Kechuang Center Equity Investment Fund, for the purpose of making equity investments directly or indirectly in technology and innovation enterprises. The other parties to the Fund LP Agreement (Phase II) are the GP, International Group, Shanghai Xingjia, Shanghai Guosheng Group, Shanghai International Port Group, Shanghai Trust and Shanghai Jiayue. The Fund LP Agreement (Phase II) has not been executed yet as at the date of this announcement and the Company will make an announcement in due course once a definitive agreement is entered into.

As at the date of this announcement, International Group is interested directly and indirectly in 33.34% of the share capital of the Company in aggregate and directly holds 31.5% of the interest of the GP, therefore both International Group and the GP are connected persons of the Company under Chapter 14A of the Listing Rules. Accordingly, the transactions in connection with our participation in the Investment Fund (Phase II) constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.81 of the Listing Rules, a series of connected transactions will be aggregated and treat them as if they were one transaction if they were all entered into within a 12-month period or otherwise related. As the Company and International Group are both parties to the Fund LP Agreement (Phase I), the Fund LP Agreement (Phase II) and the partnership agreement in relation to the establishment of the Shanghai Biomedical Industry Equity Investment Fund Partnership (LP), and these transactions are of a similar nature and are entered into within the period of 12 months or otherwise related, such transactions shall be aggregated for the calculation of the relevant percentage ratios. As the highest percentage ratio applicable to such transactions upon aggregation is more than 0.1% but less than 5%, the proposed participation in the Investment Fund (Phase II) will be subject to the reporting and announcement requirements but exempted from circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

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INTRODUCTION

We refer to the announcement of the Company dated 30 October 2017, in relation to the Company's participation in the Investment Fund (Phase I) as a limited partner.

The Board is pleased to announce that on 28 April 2021 it approved Guotai Junan Zhengyu, a wholly-owned subsidiary of the Company, to enter into the Fund LP Agreement (Phase II) to participate as a limited partner in the Investment Fund (Phase II), which is the second phase of the Shanghai Kechuang Center Equity Investment Fund, for the purpose of making equity investments directly or indirectly in technology and innovation enterprises. The other parties to the Fund LP Agreement (Phase II) are the GP, International Group, Shanghai Xingjia, Shanghai Guosheng Group, Shanghai International Port Group, Shanghai Trust and Shanghai Jiayue.

The Fund LP Agreement (Phase II) has not been executed yet as at the date of this announcement and the Company will make an announcement in due course once a definitive agreement is entered into.

PRINCIPAL TERMS OF THE FUND LP AGREEMENT (PHASE II) AND OTHER MATERIAL ARRANGEMENTS WITH RESPECT TO THE INVESTMENT FUND (PHASE II)

Name of the Fund:	Shanghai Kechuang Center Equity Investment Fund (Phase II) LP
	(上海科創中心二期股權投資基金合夥企業（有限合夥）)
Parties:	• General partner: Shanghai Kechuang Center Equity Investment
	Fund Management Limited;
	• Limited partners:
	o	International Group,
	o	Shanghai Xingjia,
	o	Guotai Junan Zhengyu,
	o	Shanghai Guosheng Group,
	o	Shanghai International Port Group,
	o	Shanghai Trust;
	• Special limited partner: Shanghai Jiayue
Nature:	Limited partnership
Place of registration:	Shanghai, the PRC

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Capital Commitment

The Investment Fund (Phase II) is the second phase of the Shanghai Kechuang Center Equity Investment Fund. The total capital commitment of all the partners of the Investment Fund (Phase II) shall be RMB4,101 million as follows:

Parties	Capital Commitment		Percentage
	(RMB ten thousand)	(%)
the GP	4,000	0.98
International Group	200,000	48.77
Shanghai Xingjia	50,000	12.19
Guotai Junan Zhengyu	50,000	12.19
Shanghai Guosheng Group	50,000	12.19
Shanghai International Port Group	46,000	11.22
Shanghai Trust	10,000	2.44
Shanghai Jiayue	100	0.02
Total	410,100	100.00

The initial capital contribution by each of the parties above shall be 15% of the total capital commitment of each party, due on the date as stipulated in the notice to be issued by the GP after the execution of the Fund LP Agreement (Phase II), and the subsequent capital contributions shall be made according to the capital needs of the Investment Fund (Phase II) based on factors including, among other things, the fund's investments, payment of management fees and payments of other expenses.

As at the date of this announcement, the Company holds 13% of the equity interest of the GP. Therefore, the total capital commitment of the Group in connection with the Investment Fund (Phase II) amounts to RMB505.2 million.

The capital commitment by each party was determined after arm's length negotiations among the parties with reference to their respective interests in the Investment Fund (Phase II) as well as its investment objectives. The Company will finance its capital commitment by internal resources.

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Management and Operation

The GP is authorized as the executive partner and shall be responsible for the investment decision and day-to-day operation of the Investment Fund (Phase II) as the fund manager and the general partner.

The Investment Fund (Phase II) will establish an Investment Decision-making Committee, which will be comprised of internal committee members and external committee members, responsible for considering and deciding on investment in and exiting from investment projects of the Investment Fund (Phase II) and relevant matters. Internal committee members will include the general manager, vice general manager in charge of investment and personnel responsible for compliance and rick control of the GP, and external committee members will include one representative appointed by each of the investors contributing no less than RMB1 billion. All resolutions of the Investment Decision-making Committee shall be approved by two thirds or more of the committee members including half or more of the external committee members.

Management Fee

The Investment Fund (Phase II) shall pay the fund manager a management fee equivalent to 1% per annum of the paid capital contribution (after deduction of exit distributions) of the Limited Partners as specified in the payment notices to be issued by the GP.

The management fee shall be used to cover payments to the fund management team and other operating expenses incurred in connection with the management of the Investment Fund (Phase II).

Profit Allocation

The distributable cash derived from investment projects of the Investment Fund (Phase II) shall be preliminarily allocated among the partners on a pro-rata basis according to their respective investment contribution to such projects.

The dividends preliminarily attributable to partners of the Investment Fund (Phase II) shall be allocated in the following manner and order:

1. First round: allocated to each Limited Partner until all of the accumulated allocation to such Limited Partner equals the accumulative paid capital contributions at the time of allocation;
2. Second round: the remaining distributable cash income after the first-round allocation (if any) shall be allocated to all Limited Partners in proportion to their respective capital contribution until all Limited Partners realize an annualized return of 8% on their capital contribution to the Investment Fund (Phase II); and
3. Third round: 90% of the remaining distributable cash income after the second round allocation (if any) shall be allocated to all Limited Partners in proportion to their respective capital contribution to the Investment Fund (Phase II) while the other 10% shall be allocated to the GP, Special Limited Partner and Cornerstone Investors as a performance-based bonus in proportion of 4:1:5.

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Terms

The term of the Investment Fund (Phase II) is 15 years since the grant of its business license by the relevant authorities. The lock-in period for investment and exit shall not exceed ten years, which includes an investment period of four years and an exit period of four years which is extendable upon the approval by the GP for one year and by the advisory committee of Investment Fund (Phase

1. for another year. After the lock-in period, the Investment Fund (Phase II) shall be dissolved and liquidated. Upon certain events, the Investment Fund (Phase II) may be dissolved and liquidated before the expiry of its term.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, International Group is interested directly and indirectly in 33.34% of the share capital of the Company in aggregate and directly holds 31.5% of the interest of the GP, therefore both International Group and the GP are connected persons of the Company under Chapter 14A of the Listing Rules. Accordingly, the transactions in connection with our participation in the Investment Fund (Phase II) constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.81 of the Listing Rules, a series of connected transactions will be aggregated and treat them as if they were one transaction if they were all entered into within a 12-month period or otherwise related. As the Company and International Group are both parties to the Fund LP Agreement (Phase I), the Fund LP Agreement (Phase II) and the partnership agreement in relation to the establishment of the Shanghai Biomedical Industry Equity Investment Fund Partnership (LP), and the transactions under these agreements are of a similar nature and are entered into within the period of 12 months or otherwise related, such transactions shall be aggregated for the calculation of the relevant percentage ratios. As the highest percentage ratio applicable to such transactions upon aggregation is more than 0.1% but less than 5%, the proposed participation in the Investment Fund (Phase II) will be subject to the reporting and announcement requirements but exempted from circular and independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

REASONS FOR AND BENEFITS OF ENTERING INTO THE TRANSACTIONS

The Company has been satisfied with the performance of and investment return from the Investment Fund (Phase I) since its establishment. Through the participation in the Investment Fund (Phase II), the Group will be able to further implement its strategy of innovation-driven development and fulfill its duty as a state-owned financial enterprise to support the development of Shanghai as a technology and innovation center. The participation in the Investment Fund (Phase II) by the Group will also strengthen the strategic synergy with International Group. Taking advantage of the abundant industrial resources of the Investment Fund (Phase II) will be able to improve the Company's advantage in the investment banking business in the Science and Technology Innovation Board of Shanghai Stock Exchange as well as the investment ability in buy-side business.

The Board (including all the independent non-executive Directors) considers that the transactions above are in the ordinary and usual course of business of the Group and on normal commercial terms, and the terms of the Fund LP Agreement (Phase II) are fair and reasonable, and in the interests of the Company and its shareholders as a whole.

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As each of Mr. Liu Xinyi, Ms. Guan Wei, Mr. Zhou Lei and Mr. Zhong Maojun holds certain positions in International Group and/or its associates, they have abstained from voting on the Board resolution approving the Fund LP Agreement (Phase II). Saved as disclosed above, none of the Director has a material interest in the transaction in connection with the Fund LP Agreement (Phase II) or holds any position in International Group and/or its associates which required them to abstain from voting on the relevant Board resolution.

GENERAL INFORMATION

The GP

The GP is a limited liability company incorporated in the PRC. As at the date of this announcement, International Group and the Group are interested in 31.5% and 13% in the GP respectively and therefore the GP is our connected person under Chapter 14A of the Listing Rules.

International Group

International Group is a limited liability company incorporated in the PRC and is primarily engaged in financial-oriented investment, capital operation and asset management and other relevant financial business. As at the date of this announcement, International Group is interested directly and indirectly in 33.34% of the total equity interest of the Company in aggregate and is a connected person of the Company under Chapter 14A of the Listing Rules. The ultimate beneficial owner of the International Group is Shanghai SASAC.

Shanghai Xingjia

Shanghai Xingjia is a limited partnership incorporated in the PRC and is primarily engaged in equity investment and venture capital, as the date of this announcement, the ultimate beneficial owner of Shanghai Xingjia is Shanghai Jiading District State-owned Assets Administration Commission. Shanghai Xingjia is an independent party of the Company.

Guotai Junan Zhengyu

Guotai Junan Zhengyu is a company incorporated in the PRC with limited liability and is principally engaged in equity investment and financial product investment. At the date of this announcement, Guotai Junan Zhengyu is a wholly-owned subsidiary of the Company.

Shanghai Guosheng Group

Shanghai Guosheng Group is a limited liability company incorporated in the PRC and is primarily engaged in non-financial investment, financial investment, capital operation and asset management, industry research and social and economic consultation. The ultimate beneficial owner of Shanghai Guosheng Group is Shanghai SASAC. Shanghai Guosheng Group is an independent party of the Company.

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Shanghai International Port Group

Shanghai International Port Group is a joint stock company with limited liability incorporated in the PRC, the shares of which are listed on the Shanghai Stock Exchange (Stock Code: 600018), and is primarily engaged in domestic and foreign goods loading and unloading, storage, transit and land and sea transport. The ultimate beneficial owner of Shanghai International Port Group is Shanghai SASAC. As at the date of this announcement, International Group directly and indirectly held 3.29% of the share capital of Shanghai International Port Group. Shanghai International Port Group is an Independent Third Party to the Company.

Shanghai Trust

Shanghai Trust is a limited liability company incorporated in the PRC and is primarily engaged in trust business, asset management, investment banking and family wealth management business. As at the date of this announcement, Shanghai Trust is held as to 97.33% by Shanghai Pudong Development Bank, in which International Group held (directly and indirectly) 29.67% equity interest. Shanghai Trust is an Independent Third Party of the Company.

Shanghai Jiayue

Shanghai Jiayue is a limited partnership incorporated in the PRC and is primarily engaged in enterprise management consulting and information consulting service. As at the date of this announcement, each of Mr. Yang Bin (as general partner), Mr. Yuan Zhide, Mr. Kang Ming, Ms. Sun Xin held 25% of the capital contribution of Shanghai Jiayue, who are the core management members of the GP. Shanghai Jiayu is an Independent Third Party of the Company.

DEFINITIONS

Unless the context otherwise requires, the following expressions have the following meanings in this announcement:

"Board"

"Company"

the board of directors of the Company

Guotai Junan Securities Co., Ltd. (國泰君安証券股份有限公司), a joint stock limited company incorporated in the PRC in August 1999, the A Shares of which are listed on the Shanghai Stock Exchange (stock code: 601211)

"Cornerstone Investors"	limited partners of the Investment Fund (Phase II) subscribing
	for not less than RMB1 billion capital contributions or deemed as
	strategically important to the Investment Fund (Phase II) by the
	GP
"Director(s)"	director(s) of the Company
"Fund LP Agreement	Shanghai Kechuang Center Equity Investment Fund (Phase I)
(Phase I)"	(L.P.) LP Agreement entered into among the GP, the International
	Group, the Company and other Independent Third Parties in
	relation to the establishment of the Investment Fund (Phase I)

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"Fund LP Agreement	the Shanghai Kechuang Center Equity Investment Fund (Phase
(Phase II)"	II) (L.P.) LP Agreement to be entered into among the GP,
	International Group, Shanghai Xingjia, Guotai Junan Zhengyu,
	Shanghai Guosheng Group, Shanghai International Port Group,
	Shanghai Trust and Shanghai Jiayue, which has not been executed
	yet as at the date of this announcement

"GP"

"Guotai Junan Zhengyu"

Shanghai Kechuang Center Equity Investment Fund Management Limited (上海科創中心股權投資基金管理有限公司), a company

set up by International Group, Shanghai Guosheng Group, Shanghai International Port Group, Shanghai Trust, Shanghai

Zhangjiang Hi-Tech Park Development Company Limited (上海 張江高科技園區開發股份有限公司) and us. As at the date of this

announcement, International Group and the Group are interested in 31.5% and 13% in the GP, respectively

Guotai Junan Zhengyu Investment Co., Ltd. (國泰君安證裕 投資有限公司), a wholly-owned subsidiary of the Company

incorporated in the PRC

"Group"	the Company and its subsidiaries
"Investment Fund	Shanghai Kechuang Center Equity Investment Fund (Phase I) L.P.
(Phase I)"	(上海科創中心一期股權投資基金合夥企業（有限合夥）)
"Investment Fund	Shanghai Kechuang Center Equity Investment Fund (Phase II)
(Phase II)"	L.P. (上海科創中心二期股權投資基金合夥企業（有限合夥）)

"Independent Third Part(ies)" part(ies) not connected with the Company or its subsidiaries within the meaning of the Listing Rules as far as the Directors are

	aware after having made all reasonable enquiries
"International Group"	Shanghai International Group Co., Ltd. (上海國際集團有限公
	司), our controlling shareholder, a limited liability company
	incorporated in the PRC in April 2000
"Investment Decision-making	the decision-making institution responsible for considering and
Committee"	deciding on investment in and exiting from investment projects of
	the Investment Fund (Phase II) and relevant matters
"Limited Partner"	limited partner of Investment Fund (Phase II), namely
	International Group, Shanghai Xingjia, Shanghai Guosheng
	Group, Shanghai International Port Group, Shanghai Trust and
	Guotai Junan Zhengyu

"Listing Rules"

"PRC"

the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

the People's Republic of China, for the purpose of this announcement, excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan

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"RMB"

"Shanghai Guosheng Group"

Renminbi, lawful currency of the PRC

Shanghai Guosheng (Group) Co., Ltd. (上海國盛（集團）有限公

司), a limited liability company incorporated in the PRC in April 2007

"Shanghai International	Shanghai International Port (Group) Co., Ltd. (上海國際港務（集
Port Group"	團）股份有限公司), a joint stock company with limited liability
	incorporated in the PRC and the shares of which are listed on the
	Shanghai Stock Exchange (Stock Code: 600018)
"Shanghai Jiayue" or	Shanghai Jiayue Enterprise Management Consulting Limited
"Special Limited Partner"	Partnership (上海嘉約企業管理諮詢合夥企業（有限合夥）), a
	limited partnership incorporated in the PRC in February 2021
"Shanghai Kechuang Center	parent fund including the Investment Fund (Phase I), Investment
Equity Investment Fund"	Fund (Phase II) and other funds to be established by investors
	through different phases
"Shanghai SASAC"	Shanghai State-owned Assets Supervision and Administration
	Commission
"Shanghai Trust"	Shanghai International Trust Co., Ltd. (上海國際信託有限公司),
	a limited liability company incorporated in the PRC in May 1981
"Shanghai Xingjia"	Shanghai Xingjia Equity Investment Limited Partnership (上
	海興嘉股權投資合夥企業（有限合夥）), a limited partnership
	incorporated in the PRC in April 2015

In addition, the terms "associate(s)", "connected person(s)", "connected transaction(s)", "substantial shareholder", "percentage ratio(s)" and "subsidiary(ies)" shall have the meanings ascribed to them under the Listing Rules.

By order of the Board

Guotai Junan Securities Co., Ltd.

HE Qing

Chairman

Shanghai, the PRC

28 April 2021

As at the date of this announcement, the executive directors of the Company are Mr. HE Qing, Mr. WANG Song and Mr. YU Jian; the non-executive directors of the Company are Mr. LIU Xinyi, Ms. GUAN Wei, Mr. ZHOU Lei, Mr. ZHONG Maojun, Mr. WANG Wenjie, Mr. LIN Facheng, Mr. ZHOU Hao and Mr. AN Hongjun; and the independent non-executive directors of the Company are Mr. XIA Dawei, Mr. SHI Derong, Mr. CHEN Guogang, Mr. LING Tao, Mr. JIN Qingjun and Mr. LEE Conway Kong Wai.

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