Chapter 1215 The huge Hanhua
After many years of establishment, Hanhua Capital's business has expanded from a simple VC to incubator, VC, PE, private equity, hedge funds and real estate trust funds, as well as new mezzanine funds that entered last year.
Merky funds, also known as MBO funds, are mainly used in 'management acquisition'.
Generally speaking, the payment method for management acquisitions is an all-cash acquisition, not a share exchange acquisition, so acquisition financing is crucial.
In a typical MBO financing structure, the funding source includes three parts:
1. 10% of the purchase price is provided by the management team, and this part of the funds forms the equity capital of the reorganized enterprise after the merger is completed.
2. 50-60% of the purchase price is provided by bank loans. This part of the funds forms senior debt claims and is collateralized by corporate assets. It is generally a syndicated loan composed of multiple banks.
3. 30-40% of the purchase funds are provided by the mezzanine fund.
The essence of a mezzanine fund is a borrowing fund, which provides and recovers funds in a way that is consistent with ordinary loans, but is located behind bank loans in the order of corporate debt repayment.
So in mergers and acquisitions, mortgaged financing methods such as bank loans are senior debts, while mezzanine funds are secondary debts.
Junk bonds, which are very famous in leveraged acquisition financing, are also a way to provide subprime debt funds, and have the same role as mezzanine funds.
However, due to the credit crisis in the junk bond market after the 1990s, subprime debt funds in Western leveraged acquisitions mainly come from mezzanine funds.
In the past eight years of Hanhua, 118 funds have been established.
There are 51 venture capital funds, 39 private equity funds, 17 real estate investment funds, 7 mezzanine funds, and 4 hedge funds.
The total size of managed funds is US$142.9 billion.
Venture capital funds account for nearly one-third of the total, with private equity funds and hedge funds accounting for similar proportions, both at around $45 billion.
The real estate investment fund is around 10 billion yuan, while the mezzanine fund currently only has US$2.8 billion.
Hanhua Capital has been established for eight years, with an average annual return rate of 73%, outperforming its global peers.
In 2007, the total revenue was US$61.9 billion, and the "Indian Ocean Fund" led by Sun Zhenping, Jiang Ping, Zhong Lifang and Zhao Peng accounted for the majority.
After deducting the company's share of the share of the company, the customer share of the share of the company and tax, the net profit was US$17.16 billion, an increase of 68% year-on-year.
Finally, there are four independent funds under Hanhua.
Phoenix Fund, Pacific Fund, Qinglong Fund and Jupiter Fund.
Phoenix Fund was established in 2007 and raised US$20 billion in S Fund, mainly focusing on investing in equity in unlisted companies.
Pacific Fund and Qinglong Fund are Hanhua's signatures.
The former is the world's largest hedge fund, with $110 billion in management.
In 2007, investment benefits of US$67.4 billion, most of which were the benefits of shadow funds.
For example, this time, the "Paulson Fund" was pushed to the top of the global hedge fund profit rankings by Alpha magazine.
30% of its principal of its position came from Hanhua, but this amount of funds increased Pacific Fund's revenue by nearly 10 billion US dollars.
For example, Thiel Fund, its hedge fund department is completely manipulated by Han Hua in secret, and its investment returns are even above the "Paulson Fund".
There are many similar examples.
Xu Liang has been in the field for many years, and Hanhua has hundreds of shadow funds. Except for Hanhua himself, the outside world cannot understand Hanhua's huge capital context.
According to Hanhua's rules, when the annual return on investment exceeds 50%, Hanhua can obtain 30% of the total income.
Add to the 2% management fee, $21.568 billion of the $67.4 billion belongs to Hanhua, of course this is before tax.
If tax deductions, the final net profit will be around US$12.7 billion.
The Qinglong Fund is larger than Pacific Fund, managing a huge amount of $160 billion in funds last year.
It has 11 sub-funds, and its investment fields include almost all areas such as the Internet, high technology, and energy.
Because of leverage, Qinglong Fund controlled more than US$500 billion in assets at its peak.
It took Hanhua nearly a year to completely close the position.
Qinglong Fund earned US$53.15 billion, with an average annual return of 33.21%.
Hanhua's net profit before tax was 22%, which is US$11.693 billion, and its net profit after tax was about US$7 billion.
I won’t talk about Phoenix Fund.
Jupiter Fund is the real foundation of Hanhua.
This department, called the "Jupiter Fund" to the outside world, is actually Hanhua's self-operated department.
Hanhua's self-operated department basically uses its own profitable funds to invest.
The first time included equity, precious metals, real estate, jewelry raw materials, high-end wine, bonds, etc.
But later as the company became larger and larger, in order to facilitate management, in addition to precious metals, industrial lithium carbonate, rare earths and artworks were sold to Hongyan.
Most of the rest was sold.
Only equity, bonds and cash are left.
Hanhua's assets had expanded to US$93.85 billion in June 2005, cash and short-term bonds were US$32.85 billion, and total liabilities were US$18.18 billion.
Net assets are US$74.67 billion.
Later, Xu Liang made money from the gold market duel with Soros; and in 2006, he worked with the Montes family, Goldman Sachs and Morgan Stanley to make money from CDO bonds.
The two combined have a pre-tax income of over 100 billion US dollars, of which more than 60 billion US dollars earned from the US market were taken out to establish the Xu Family Charity Fund "group".
Why is it a ‘group’?
In order to avoid the attention of donating one hand, Xu Liang has established more than 20 charitable funds in the name of his relatives.
Even people who know him think he is very generous to his relatives and one person is enlightened and a dog can ascend to heaven.
In fact, these charitable funds are basically under his control, and relatives have gained practical benefits of hundreds of thousands of dollars a year, and they don't mind paying a little in name.
In addition to the donation, there are still about US$24 billion left after the remaining tax.
In addition to the net income of Hanhua Capital, Qinglong Fund, Hanhua Securities and other departments, as well as the original capital after-investment income of Jupiter Fund.
Hanhua Capital's net assets are now close to US$200 billion.
More than 90% are cash.
In terms of equity assets, only 30% of the equity funds such as Xu Xin's "Today's Capital", Duan Yongping's "H&H Investment", Zhang Lei's "Hillhouse Capital", and Ma Ziming's "Snow Lake Capital".
In 2007, Hanhua's total revenue was US$165.7 billion [not counting the self-operated sector] and net income before tax was US$67.8 billion.
Donated all the US$32.1 billion that Han Hua benefited from the US market in 2007 to the "Xu Family Charity Foundation" as planned.
The remaining $35.7 billion in pre-tax income is deducted according to different capital gains taxes in various countries, and then deducting the share of internal employees of the company. The money actually falls into Hanhua is about $24 billion, with the highest profitability in the world.
However, because Hanhua is not a listed company, he does not need to disclose his financial status to the outside world.
Therefore, the outside world does not understand Hanhua's real financial situation.
Otherwise, you will definitely be in the forefront on the top 500 list.
Although Hanhua has a lot of profits, the fundraising scale of Qinglong Fund and Pacific Fund has declined.
The reason is also very simple.
Subsidiary debt crisis.
Because ordinary people lack channels, they can only get some news from the news that follow the crowd.
But the powerful are different. They have deep connections and amazing energy. They can get more accurate information and make more accurate judgments about the current situation.
So, they took the initiative to reduce the scale of their investment, even directly reducing it by half.
In this way, even if Hanhua continues to make a lot of money in investment, they can still make a profit.
If Hanhua's investment loses, they will at least keep their principal and even make some profits.
Nothing will be lost.
This also caused Hanhua's asset management scale to drop from US$437 billion at its peak in 2007 to US$279 billion now, leaving only 60% of the original.
This is the general environment, and Xu Liang cannot change it.
However, when the situation stabilizes, Hanhua defeats the economic crisis and makes profits against the trend will definitely attract more funds.
The information ends with a construction plan for "Hanhua Asset Management Company".
This is part of the more grand construction plan of the "Hanhua Financial Holding Group" that he discussed with Jiang Xiaoyang.
After the establishment of this company, it will take over all Hanhua's current wealth management and asset management businesses.
The product matrix includes money funds, bond funds, mixed funds, stock funds, real estate trust funds, etc. The ultimate goal is that Hanhua Asset Management Company is responsible for all public fund investments, as well as financial planning for high-net-worth clients and large LPs [such as pension funds, companies with investment business].
Hanhua Capital will be responsible for all private equity investments under Hanhua Financial Holding Group.
Including venture capital, private equity, private equity securities, mezzanine funds, hedge funds, etc.
Hanhua Asset Management and Hanhua Capital can allocate each other's funds, which is not absolutely clear.
After completing the reform, Hanhua Financial Holding Group will form six major business matrices: securities, banking, insurance, private equity, public equity, and trust, plus Snowball Network, Jupiter Fund [Owned Asset Investment], Qinglong Fund [Private Equity], Phoenix Fund [S Fund], and Pacific Fund [Hedge Fund], a total of 11 major subsidiaries.
Once this plan is completed, Hanhua will become a comprehensive global financial giant comparable to Citigroup and JP Morgan.
It will also become the financial core of the Xu Consortium, which currently has assets of over one trillion US dollars!
Thinking of the future, Xu Liang couldn't help but become expectant.
——
In the small courtyard of Omaha, two old men, Buffett and Charlie Munger, finished playing table tennis, took the towel handed over by Li Lu, and wiped the sweat from their foreheads. "Li, I missed the opportunity to short the subprime mortgage last year. Do you feel regretful when I saw others earning billions of dollars, or even more than one billion dollars?" Old Man Ba asked with a smile.
Li Lu shook his head gently with a calm expression.
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"Munger told me that although shorting subprime mortgages can make a lot of money, they are ultimately paid by the government and taxpayers.
This is immoral. Even if you can make money at that time, you will be exported in the same way later, and even completely lose all your funds.
So I gave up shorting."
Li Lu shrugged, "So, there is nothing to regret. There are still many investment opportunities in the market."
Charlie Munger smiled and became increasingly satisfied with himself, a Chinese disciple.
Buffy nodded, his eyes showing approval.
"Value investment allows failures countless times, but speculation... as long as it fails once, it will make people die without a place to die.
Making quick money will numb a person's investment judgment ability and will also be addicted."
Li Lu smiled aside, but who knows the bitterness in his heart!
Go to speculation, I have clearly judged the investment direction and am about to enter the market to make money. These two hateful old guys have dissuaded me...
Of course, I also blame him for not being firm enough.
But I really envious of watching others make money with big money! "Do you have any contact with Jin Kaiser?" Old Man Ba changed his tone.
After a moment of silence, Li Lu shook his head. "There is almost no connection. Now I am not on the same level as him." Buffett laughed, walked over and patted Li Lu's shoulder, and encouraged with a smile: "Don't be discouraged, I'm more optimistic about your future development."
Then sighed, showing regret.
"Kim Caesar was a great person before, founded the respectable global technology giant "Hongmeng", and made outstanding contributions to the development of the global Internet. Unfortunately, he seems to be suffering from the bad habits of Wall Street now." Buffett didn't say anything further. He believed that Li Lu should have understood what he meant.
Li Lu did understand, and a poem appeared in his heart: Watch him build a tall building, watch him entertain guests, watch his building collapse...
But he himself knew that the opportunity was too small.
Since Hanhua shorted the global energy giant Anran in 2002 and entered the global capital market, no one is optimistic about this young boy who emerged from China.
As a result, Hanhua made billions of dollars when everyone was not optimistic.
Just when everyone thought he was lucky and the blind cat met a dead mouse, Han Hua bet on the Afghan war.
In 2003, the United States declared war, war stocks soared, and Hanhua made a big profit again.
In the envious eyes of everyone, Han Hua Ma kept entering the global futures market, and almost half of the profit was used to make soybeans.
At that time, no one was optimistic about him.
Because the equity market and futures market are completely different.
Soybean futures are even more of the toys of the four giants.
Any institution wants to make a profit here depends on the faces of the four giants.
Just as everyone was waiting for the four giants to teach this greedy guy a profound lesson, the four giants actually stood with Hanhua to raise the global soybean price.
It can be said that glasses are broken.
This time, Hanhua made tens of billions of dollars.
Firstly established Hanhua's position as a global private equity giant.
In 2005, the globally striking golden war can be called the foundation battle for Han Hua to ascend to the throne of hedging.
'Lao Wang' Quantum Fund and Soros were defeated, their glory was gone, and their majesty was ruined.
Hanhua Pacific Fund has become the world's largest hedge fund and has become the unquestionable king of the global hedge field!
At this point, no one questioned Kim Caesar's investment talent anymore.
He is also completely regarded as the financial king of the new century! "Time is the fate!" Li Lu couldn't help but sigh in his heart.
He is self-conceited that his financial talent is not inferior to anyone. Even Buffett and Charlie Munger only have almost any experience and connections.
If I were not Chinese, but pure white.
Then your achievements will definitely not be worse than them.
But.
In front of Xu Liang, he really dared not say that he could compare with the other party.
He witnessed the golden war in 2005 with his own eyes.
Xu Liang defeated Soros' tangled Western Capital Group alone!
This result can be called the "Korean War in the Financial World".
…
The three of them came to the living room of Buffett's house. As they chatted, Li Lu mentioned the latest market news.
"Recently, Goldman Sachs and Morgan Stanley have released a lot of news. There is a strong buyer who wants to buy five major investment banks, five major banks, and AIG's put options."
Buffett narrowed his eyes slightly, and Li Lu's words reminded him of his classic operations on Coca-Cola back then.
"If I didn't make a mistake, it should be the big short sellers who made a lot of profits last year who were looking at the future market and want to short the financial stocks in this way."
Munger agreed with the old guy's judgment: "Those greedy guys are afraid that the United States will not have a serious financial crisis."
Li Lu's eyes flashed: "Do you two teachers think the United States will have a financial crisis?"
Old Man Ba glanced at him and said calmly: "There is a high probability that it will break out, but it is difficult to draw conclusions now."
The Federal Reserve is making every effort to save the market, and the situation has not collapsed to the point where it is difficult to save.
"I have analyzed the put option you mentioned these days and thought it could be sold part of it."
Buffett's words were full of confidence: "Banks and investment banks are both good investment targets. Even if the stock price falls for a while, it will rise quickly."
Li Lu listened seriously. Old Man Ba is not only a master of stocks, but also good at long-term trading.
Berkshire Hathaway often uses options to play some exquisite operations and gets a large amount of premiums by selling options, also known as option fees.
You may face great losses in the early stage, but after the stock price rebounds, you will get the stock price rebound returns and the investment returns brought by option fees and option fees, and eat three times a fish.
"If you are interested in options, you can also try playing."
Old man Ba looked at Li Lu with a smile. When he saw that the other party was well-behaved and sensible, he didn't mind taking the other party to play.
The old man took him to play with him. Li Lu was naturally willing to do such a good thing.
Although he was also afraid of trampling on the pit, he still had to agree verbally.
"Okay! Just learn from you."
"Hahaha!"
Buffett smiled happily, "Okay, I'll take you to see my investment philosophy."
(End of this chapter)