Chapter 377: Verbal Sparring and Invitation From the Leader of Minnesota
Li Xiaofan said happily: "Really, that's great, thank you Mr. Zheng!"
Li Xiaofan was surprised by how efficiently GIC Special Investment Company reviewed the Pacific Online Bookstore project.
"Mr. Li, I would like to thank your company for your high level of cooperation and providing detailed DD due diligence and other information. Morgan Stanley is a close partner of our GIC. For projects approved by Morgan Stanley, we generally have a higher chance of passing the meeting. It’s very high! We have been paying attention to your project through various channels such as local banks and Singapore Post. We also have basic knowledge of some data. Moreover, in your last round of financing, you received two global investors, DFJ and IDG. Receiving funding from a well-known venture capital company is itself an endorsement..."
In the previous life, it has become the norm for venture capital investors to gather together for a project, which has been gradually formed over a long period of time.
In particular, some small investment companies like to invest behind well-known investment institutions.
In the investment industry, based on the amount of capital invested, the investor who contributes the most is called the lead investor, and the remaining investors are called follow-up investors. The leading investor generally has more say. When investors have disagreements about project management, the lead investor has priority. Lead investors are responsible for conducting due diligence on entrepreneurial projects, investment negotiations, determining investment terms, drafting investment agreements, and participating in the management of entrepreneurial enterprises.
The advantage of following the investment is that although you don't have much say, you can enjoy a lot of benefits by following the big guys, so you don't miss out on opportunities. At the same time, you don't have to go through tedious due diligence, and the risk is relatively small. Moreover, if a risk occurs, the big guys are all involved, and it is not my family that will suffer losses. The responsibility of the person in charge of the project investment is relatively small.
This is the reason why Li Xiaofan let Li bring in two venture capital institutions, DFJ and IDG.
If we can bring in investment from the Singapore Government Investment Company GIC this time, it will mean that the three giants have endorsed the Pacific Online Bookstore project, and with Morgan Stanley as the lead underwriter, the Pacific Online Bookstore project is ready to fly into the sky!
Zheng Yingjie continued: "Director Li, this time our GIC Special Investment Company has approved the approval of your Pacific Online Bookstore project in accordance with internal principles. Next, we will contact you in detail on the details of the specific investment..."
"Mr. Zheng, what is the valuation of our Pacific Online Bookstore project approved internally by your company?"
"Director Li, I'm sorry, this is an internal business secret of the company. I can't tell you for the time being. It needs to be determined through negotiation between both of us. Are you free now? If so, I will bring the team here to communicate with you now... "
"Oh, I understand. Mr. Zheng, come on. I'll wait for you in the office. I'll postpone the internal company meeting later."
An hour later, Zheng Yingjie led his investment team to the conference room of Yifan Holdings in the Singapore Science Park, and the two teams held formal negotiations.
This time it was a serious business negotiation, so the meeting was held in the square conference room of Yifan Company.
After the greetings, Zheng Yingjie got straight to the point and said:
"Director Li, after our company's internal evaluation, if our investment in your Pacific Online Bookstore project is based on a post-money valuation of US$150 million, will you accept it?"
Li Xiaofan smiled and said:
"Mr. Zheng, after the Morgan Stanley team completed the valuation modeling, they predicted that the valuation of our Pacific Online Bookstore project would be as low as US$300 million and as high as US$500 million. The reasonable market value should be around US$400 million. Your current This asking price may not be too different from Morgan Stanley’s valuation model, right?”
Zheng Yingjie also smiled and replied:
"Director Li, since the creation of valuation models, thousands of valuation methods have evolved around the world. For example, DCF, P/E, EV/EBITDA, FCFF and many other models. Morgan Stanley has their own valuation Model, we at GIC also have our own internally built valuation model. Due to confidentiality requirements, our valuation model and process are not disclosed to the public. The US$400 million valuation of your project is based on the relatively optimistic factors of the current U.S. Wall Street capital market, but our GIC company will be relatively more cautious because we manage the precious foreign exchange reserves of 3.5 million Singaporeans, and we invest. The purpose is not just to make profits, but more often to prevent risks and preserve the value of foreign exchange reserves, so please understand this aspect!”
Zheng Yingjie continued: "The world is complex and multi-factored. A company's future cash flow and discount rate are not certain values, so our company will not make investments based solely on valuation models. We need to comprehensively consider multiple factors..."
"Mr. Zheng, I very much understand your company's cautious attitude towards risk control. But as you mentioned last time, GIC is a company legally, and in business terms, I also want to ensure that our Pacific Online Bookstore shareholders Moreover, among the venture capital institutions that invested in the Pacific Online Bookstore project in the last round, there were several investors from Yifan No. 1 Venture Capital Fund. Our partners are well-known local large companies in Singapore, such as Hong Leong Group, Star Cruises and Ming Wah Holdings. These large companies, like our Yifan Company, are major taxpayers in Singapore and have contributed to the development of Singapore's economy. An important contribution! So if GIC can invest more in our project, it will also contribute to Singapore’s economy..."
…
The two sides exchanged sharp words in the conference room and conducted fierce negotiations to safeguard their respective interests.
The negotiations lasted from 3 pm to 7 pm. After nearly four hours of negotiations, both sides took a step back.
Everyone agreed to value the current Pacific Online Bookstore project at US$200 million.
After comprehensive consideration, Li Xiaofan adopted the method of selling old shares to introduce GIC Special Investment Company: 10% of the 50% equity of the Pacific Online Bookstore project previously held by Singapore Yifan Holdings Pte. Ltd. was transferred to GIC Special Investment Company.
Through this transaction, Singapore Yifan Holdings Pte. Ltd. will receive a cash consideration of US$20 million paid by GIC Special Investment Company.
Although through this transaction, Singapore Yifan Holdings Pte. Ltd.'s shares in the Pacific Online Bookstore project were reduced to 40%, Li Xiaofan continued to hold another 10% of the shares through Longmeng Investment and Longyue Investment, and he also controlled 10% of the shares of Singapore Yifan No. 1 Venture Capital Fund, so Li Xiaofan continued to firmly retain absolute control over the Pacific Online Bookstore project.
After receiving 20 million US dollars in cash, Li Xiaofan recovered all his investment in this project, and the remaining 50% of the shares were all profits!
For Li Xiaofan at the moment, the most valuable thing is to connect with the giant Singapore GIC company. The concession now is to go further in the future!
After the two parties signed the MOU, Zheng Yingjie sighed and said: "Mr. Li, thank you! Your concession is the greatest support for our team. We can finally go back to the company to report and give an account."
"You're welcome, Mr. Zheng, I respect your team's professionalism. We are very happy to have the opportunity to deal with such an excellent team as you!"
Before leaving Yifan Company, Zheng Yingjie told Li Xiaofan that the final investment agreement still needs to go through their company's internal legal review, investment decision meeting and other processes. However, because the project has been approved internally, the rest is just a routine process. According to his past experience, there should be no big problems.
…
The next day, Li Xiaofan flew directly from Changi International Airport to Shanghai Hongqiao Airport to attend the board meeting of Lianhai Microelectronics Design Center chaired by Academician Ni the next morning.
After attending the board meeting of Lianhai Microelectronics Design Center in the morning, Li Xiaofan, accompanied by investment assistant Yang Feiyan, rushed to his hometown Mingzhou City overnight in the afternoon.
This trip has two purposes. One is to visit Fenghua County under Mingzhou City and Fenghua Boway Co., Ltd.
Another thing is that Wu Xiumei called a few days ago, Director Yao, the former head of the Mingzhou Free Trade Zone Management Committee, was promoted to the deputy mayor of Mingzhou City in charge of the opening-up economy, and specifically asked to see Li Xiaofan.